January hiring slips 2.8%; bright spots in U.S. are legal, software and finance

If you’re looking for further evidence that U.S. industry is running on two different tracks these days -- in which “laptop economy” professions such as legal and finance are doing fairly well, while face-to-face jobs are facing tough times -- that message is starkly clear in the latest edition of LinkedIn’s Hiring Report.

For January, the U.S. Hiring Report showed a 2.8% decline from December’s reading, and an overall 7.6% drop from a year earlier. What looks like relatively mild slippage in aggregate turns out to be two trends pointing in sharply different directions once the focus switches to industry-by-industry outcomes.

Three industries remain ahead of their hiring tempo a full year ago, in spite of the overall decline. They are legal (+3.8%), finance (3.4%) and software and information technology (+3.0%). 

Legal and finance have adapted fairly quickly to the more-isolated new working conditions brought on by the COVID-19 pandemic and associated restrictions. Meanwhile, software hiring is surging again after underperforming the overall U.S. trend for several months.

By contrast, January’s hiring sagged in many industries where in-person contact is an essential part of how things get done. Versus the year-earlier rate, January’s hiring rate has declined by double-digit percentages in nine of the 22 industries that LinkedIn tracks -- ranging from arts and entertainment to wellness and fitness.

Recreation and travel barely budged month-over-month in January, down 0.4%, but it remains the hardest hit over the longer term, down 47% from the year-earlier pace. This category includes restaurants, which made drastic cutbacks in the spring, when public-health concerns forced many locations to close.

As labor economist Martha Gimbel recently told The Washington Post, recreation, travel and restaurants are one of the sectors that  “will not be recovering until this public health crisis is over.”

The entertainment sector has been struggling with similar problems, as seen in a 7.7% slump in its January hiring rate from the previous month. (It’s down 28.8% on a year-over-year basis.) Theaters, Hollywood and theme parks all have been jolted by pandemic-related restrictions, which have forced either closings or capacity restrictions. 

At Comcast, which operates the Universal theme parks, chief executive officer Brian Roberts told investors recently that he is optimistic about “the momentum that our theme parks will experience when we reach a sustainable recovery.” For the year term, though, Roberts cautioned that “we may experience some near term setbacks with the most recent pickup in COVID cases.”

Retail’s hiring trends have been especially chaotic. The sector was devastated by last spring’s nationwide closures but then registered a partial recovery in the summer and autumn, helped partly by a surge in online commerce. Even so, the zigzags are continuing.

Retail’s January hiring rate was down a modest 6.4% from the year-earlier level, but hopes for a recovery were smudged by a 4.1% decline from December’s level. Many physical stores continue to shed jobs, including women’s apparel chain Christopher & Banks, which recently filed for bankruptcy protection from creditors.

After slight month-to-month declines in both December and January, the LinkedIn Hiring Rate is now at its lowest level since September, observes Guy Berger, LinkedIn principal economist. Even so, it’s far above the dire readings of last spring. 

Looking ahead, Berger says, there’s reason for optimism. He sees a good chance that the overall U.S. hiring rate will rally in the spring, “due to the triple combo of vaccination, fiscal stimulus and better weather.” 

Hiring Methodology

The LinkedIn Hiring Rate (LHR) is the percentage of LinkedIn members who added a new employer to their profile in the same month the new job began, divided by the total number of LinkedIn members in that country. By analyzing only the timeliest data, we can make month-to-month comparisons and account for any potential lags in members updating their profiles. Using the U.S. Census Bureau's method to calculate seasonal adjustment, we remove predictable seasonal hiring variations to allow for easier comparison between months and analysis of emerging hiring trends.

LinkedIn data scientist Brian Xu  contributed to this article.