Working hard, just to stay in place; job promotions this year slump 40%

What does it take to get promoted in 2020?

As soon as the magnitude of the COVID-19 challenge became clear in March, jobs in practically every industry became harder to carry out. In fields ranging from logistics to fin-tech, workers and their managers have pressed ahead anyway, donning their masks, working at their home laptops until midnight, and more.

Now these people are hoping to be rewarded. However, that’s not the way things are playing out.

Data from LinkedIn’s Economic Graph team shows that the overall U.S. promotion rate has been running significantly below the year-earlier pace for all of 2020. The low point came in late April, when the promotion rate was more than 60% below its year-earlier levels. Since then, most labor-market indicators have recovered somewhat -- but not the promotion rate.

By August, as the chart above shows, the promotion rate remained about 40% below year-earlier levels, even though hiring rate had rebounded from a deep slump. In fact, the latest LinkedIn hiring rate is slightly ahead of its year-earlier pace.

Both the promotion and hiring rates are derived from the percentage of LinkedIn members updating their profiles with new jobs. The promotion rate reflects cases where employees stay at the same company but achieve higher titles. (For example, data analysts become data managers.) Typically, tens of thousands of U.S. members post their own promotions every month.

With the U.S. economy still looking vulnerable, employers may be reviving hiring to meet immediate demand -- but reining in promotions so they aren’t stuck with higher costs and bloated organization charts if conditions worsen, says Alexander Alonso, chief knowledge officer at the Society for Human Resource Management. “They want to keep the enterprise in good working order,” he explains.

Even Google declared a job-promotion pause in March that will last until November. Other industry leaders such as Dell and Quest Diagnostics have internal promotion freezes that will run at least to the end of calendar 2020.

Employees tend to think of promotions as a reward for excellence and hard work, observes Stefan Gaertner, who leads workforce analytics at Aon’s Radford unit. But in a recession, professional mobility tends to slow down, he finds. That’s true for both promotions and lateral transfers.

Colleen McCreary, chief people officer at Credit Karma, says she sees “a general sense of worry of how to grade and judge individual performance right now, with so many outlying factors.” As a result, even though companies may be seeing a surge in promotion nominations, executives may act on fewer of them, lacking certainty about which ones to approve. 

And, as Radford’s Gaertner points out, “even if a business is doing well now, executives don’t know what next year will bring. With promotions, once you give something, you can’t take it back. You can’t demote people.” For executives wanting to maximize their maneuvering room in the future, a low promotions strategy can seem appealing. 

On an industry-by-industry basis, LinkedIn data identifies four sectors where promotion rates as of Aug. 20 have been especially hard hit. Notably, recreation and travel (down 63.2% compared to year earlier levels), hardware and networking (-60.2% Y/Y), energy and mining (-58.9% Y/Y), and transportation and logistics (-58.1% Y/Y) have experienced the steepest declines on a year-ago basis.

Meanwhile, promotion rates on a year-ago basis were most resilient in education (-28.2% Y/Y), manufacturing (-31.7% Y/Y), construction (-34.3% Y/Y) and finance (-34.3% Y/Y).

Geography matters, too. LinkedIn data shows August’s promotion-rate changes were strongest in heartland cities such as Kansas City, Mo., Detroit, Pittsburgh and Cleveland/Akron, Ohio, where manufacturing is a relatively strong part of the economy. One of the biggest drops in promotion rates came in Orlando, Fla., which is a hub for tourism, hospitality and recreation -- all industries that have been hit hard by COVID-19 restrictions.

In a rare example of a gender difference this year that benefits women, promotion rates in 2020 for women have fallen slightly less than for their male counterparts on a year-vs.-year basis. Many other indicators, including workforce stress, have shown women in 2020 carrying a heavier load.

Will this cycle’s missed promotions translate into a lot of catch-up advancement once the economy stabilizes? Don’t count on it, says SHRM’s Alonso. “My guess is those promotions will never happen,” he says. 

As Alonso points out, a lot of job descriptions are written to include phrases such as “other duties as assigned.” Such language can allow companies to expand employees’ roles without adjusting their titles.

Methodology

The LinkedIn promotion rate reflects the number of LinkedIn members who add a new, higher seniority position at the same employer to their profile in the same month the new job began -- divided by the total number of LinkedIn members in that country. A 14-day rolling sum of promotions is calculated to reduce fluctuations in the daily data. These rolling-sum promotion rates then are matched against the same days of the week a year earlier. The resulting ratio shows year-over-year changes in the promotion rate. This approach controls for day-of-week effects in promotion data.

LinkedIn data scientists Paul Matsiras and Brian Xu contributed to this report.