In this episode of the Top of Mind podcast, Mike Simonsen sits down with Nick Bunker, Director of North American Economic Research at Indeed, for a deep dive into the employment trends that are driving today’s housing market. Nick offers his take on how the strong labor market may mitigate recession risk, what’s happening with wage growth and what this means for housing affordability, and how we know remote work is here to stay. He also gives us a behind-the-scenes look at the data Indeed uses to see trends before they hit the headlines.
Nick Bunker is the Director of North American Economic Research at Indeed. He’s a labor economist with extensive experience discovering insights into economic data and communicating them to a variety of audiences. He’s also a widely-cited labor market commentator whose analysis has been used by The Wall Street Journal, The New York Times, NPR, NBC, CBS, and others.
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Intro 0:02
Welcome to Top of Mind, the show where we talk to real estate industry insiders and experts about the biggest trends impacting the market today. Enjoy the show.
Mike Simonsen 0:13
Mike Simonsen here. Thanks for joining me today. Welcome to the Top of Mind podcast. This is where I talk to the smartest leaders, thinkers and doers in the real estate industry in the broader economy, to understand where the world is right now, you know, for a few years now, we've been sharing the latest market data every week in our weekly Altos Research video series. With the Top of Mind podcast, we're looking to add context to the discussion about what's happening in the market from from the leaders, the a lot of other sources, people who think about the data in the market, and all the components each week, of course, Altos Research tracks every home for sale in the country. We check all the pricing all the supply and demand we do all those analytics and in the changes in that data, and we make it available to you before you see it in the traditional channels. People desperately need to know what's happening right now in the housing market. The market froze so cold last fall, and suddenly things are changing. Everybody is worried about what happens in 2023, though. And so if you need to communicate about this market to your clients, your buyers and sellers right now, go to altosresearch.com, for just free consultation, we could talk about the local market, how you use market data in your business. And speaking of what's happening in the market, and whether or not we should be worried about what's coming for 2023. I've got another amazing guest today, Nick Bunker, Nick is the director of North American economic research at Indeed.com. He's an expert labor economist with extensive experience at discovering insights and economic data, and communicating to them in a variety of audiences. Nick is great in social media, and I really appreciate that. He's also widely cited labor market commentator, his analysis has been used by the Wall Street Journal, the New York Times, NPR, NBC, CBS, and lots of others. Nick definitely has his pulse on what's happening with the jobs and the economy. And so that's what we're going to focus on today. And really thinking about how the changes in the the economic scenario and the job scenario, really impact us for 2023. So Nick, welcome.
Nick Bunker 2:36
Mike, thanks for having me.
Mike Simonsen 2:37
All right, let's let's start with tell us a little bit about Indeed and your role there. So we get a little we get a little background.
Nick Bunker 2:46
Yeah, sure. So Indeed, hopefully, folks note, it's, you know, the world leader in job search. It's a hiring platform that is widely used. And so my role is that I am part of the Hiring Lab, which is Indeed’s team of global labor researchers. So team of economists, data scientists, other researchers who use data from Indeed, but also data from elsewhere to help shine light on what's happening in the global labor markets. So you mentioned my title, I am the director for North America, that's the USA, Canada, but we have economists and researchers across the globe, we focus in Europe, France, Germany, the UK, but we also have an economist in Australia and Japan. So if any interest there, but honestly, I think the focus is here in the US for our conversation. So a lot of what we do is looking into Indeed data and you're talking about what you all do is for the weekly updates, and were in a similar line of business, at least when it comes to job postings. So one of the things that folks may know our research for is that we had on a weekly cadence sort of release data on the amount of job postings on Indeed, across US markets and by geographic range. So we are both researchers and providers of essentially real time labor market data.
Mike Simonsen 4:00
Yeah. And that's really like why I was looking forward to this conversation today. Good jobs and the job market are seem like a pivotal factor for what happens to housing this year, like we are the housing slowed way down last fall, there are lots of recession fears, but one of the the elements, the counter arguments about a recession fear and really about, you know, how, how far does does housing fall? How cold can it get is the fact that everybody in the country is like we're still really well employed, right? It's, it's, you know, late January when we're recording this. And jobs are still super strong. And, and so, what should give me the overview, like what should I think about employment, in a broad sense, and really 2023 Like, how should I be thinking about that?
Nick Bunker 5:00
So it's funny when you said the housing market really froze up last fall, you know, to extend that temperature metaphor, labor market has cooled a little bit from where it was, say, late 2021, early 2022, but still hot. It's like the temperature dropped from 105 down to 90 degrees. Yeah, things are still quite strong. I think there's a variety of metrics you can look at to understand that way. I think the first thing is, you know, unemployment rate, three and a half percent, which is the same level that we saw back in late 2019, early 2020. So I think that's holding up. And it's essentially been at that level or two tenths of percentage point about that, since the middle of last year. And there's been sort of anything, it's popped up a little bit in trying to back down. But I also think the number that is astounding is that always the unemployment rate 3%. But the employers keep adding jobs at very elevated levels. We saw the average monthly payroll gains, it slowed down throughout 2022. And will, some of that data will get revised in the next jobs report. But it's still growing at a pace well above what you need, just keep up with the population. So that that's a sign that like there's really strong demand. And you can see that in data, like job postings on Indeed, where they have come down from where they were a year ago. And the latest data that we have is through last Friday, which in this case is January 20, that job postings are down around around 10% year on year. But if you look at them the level compared to where it was on February 1 2020. So sort of a rough pre pandemic baseline, it's still up more than 40%. So demand is still quite elevated. And you can see some government data too, which is lagging, but the number of job openings, if you look at the ratio of job openings to unemployed workers, there's about 1.7, which is highest space, but then consider that prior to the pandemic was about 1.2. So it's still very elevated. And oh yeah, wage growth is we support inflation. Still pretty rapid, even though it's coming down. So this is a hot labour market. One, it's moderating a bit, but there's still lots of strength.
Mike Simonsen 7:08
So I have so many questions to go like, right from there. Maybe the first question that the top question that comes to mind is, is you know, I'm in San Francisco, I run a tech company in San Francisco. The headlines, you know, are layoffs, layoffs, layoffs, layoffs every day? How does that factor in to the hot labour market and the numbers that you're talking about?
Nick Bunker 7:30
Yeah, so I think that that is a description that hot, you know, the temperature in say, the tech labour market, in particular, in San Francisco, things have dropped more they're you all are used to chilly, chilly, your peers and maybe other parts of the country. I see that being different Florida. So there's definitely some climactic differences here in the labor market. And I think when you're looking at what's happening with the tech sector, again, I think it's useful to think about the last few months and then shifting the baseline a little bit. My read of what happened is has happened in the tech sector is that they hide like gangbusters through most of 2020 21 into 2022. And now there's a reevaluate revaluation going on. So we actually saw this and Indeed job postings before the layoffs started. When you started hearing rumblings about hiring freezes, you could see job postings for software development positions. They started to trend down and then sort of in that's, a lot of times you see labor market, labor markets start to cool down, or sectors cooldown started hiring goes first and then layoffs happen. And we could see that May of last year, April may detect those job postings which for the most part, software developers tend to work at tech companies that slow down first. But I think what we're seeing now, in the layoffs, that these large tech companies aren't representative of what we're seeing in the overall US economy. I think, if you look at the aggregate statistics, of of layoffs in the US, not only are they low, they are so low that let me put it this way. The latest data we have on the layoff data from the Bureau of labor statistics is the end of November, November was the 21st straight month that the layoff rate was below its all time low prior to the pandemic. So we've almost had two years of extraordinarily low layoffs. And things are still very low for like leisure and hospitality.
Mike Simonsen 9:25
Right. So even though we have layoffs in tech, the overall total number of layoffs is still is still near record lows.
Nick Bunker 9:35
Yeah, it is. Yeah, it's okay. If last November that happened prior to the pandemic, it would have been an all time low
Mike Simonsen 9:43
all time low. And you know, maybe we have a few more post November. Yeah, but but we're still not that many more. Right. So we're still near record lows, maybe record lows prior to the pandemic. Wow. Okay, so then the next question I have is, is about leading data? So does tech to the tech layoffs potentially lead the rest of the market? And, or, and then and then the corollary is that, you know, even if they don't like, you know, is there, you know, is there like we have some leading indicators now on job postings, broader market, maybe that like, can then if you said our, our job postings peaked in May of last year in the tech side, right. And we could then see layoffs starting November, December, January, maybe a six month seven month lead time from job postings to layoffs.
Nick Bunker 10:47
Because that is that I don't know, a useful rule. That's like, I don't know if that's like an ironclad like law, right? Like that. I do think they're in, you see this in, say, the aggregate us labour market that it is high, it's when the unemployment rate starts to creep up at first, it's because there's just reduced hiring. Yeah. And then once layoffs start happening, that's when things really escalate. And what we've seen, so I guess the answer, the first part is, I don't think what we're seeing now in the tech sector is necessarily, you know, it's not representative of overall labor market. And I don't think it's a leading indicator either. I think some of the sectors, some of you know, some of the forces that are leading to these pullbacks, the pullback, retrenchment productions, however, want to put it for the tech sector. Yep, arts, the same thing that you're seeing in other parts of the economy, and particularly industries that tend to that actually do employ far more workers, I think, an expansive definition of the tech sector, employments about 2% of total employment and think about, say, healthcare, which is closer to six of all employment, the dynamics are really different. The tech hired a tonne, but then you think about all the stories you read about the constraint hiring for health care, or education for bars and restaurants, leisure and hospitality or even retail at certain points. If anything goes industries, they're still constrained, they're still looking to hire, they still have elevated rates of turnover. So that's not the experience of your tech or even you know, some one sector we are seeing some retrenchment into is like say like transportation, warehousing, because everything, everyone's getting stuff ordered to their house. Yep. They're still like trying to catch up to where they were pre pandemic, there's still demand there. And also, household spending is still looks to be rotating still back towards in person services spending. So there's some for momentum there as well.
Mike Simonsen 12:47
I see. Okay, that's really cool. Okay, so tech is only 2% of the jobs. Like even it just, it's just, you know, what a surprise. It's just takes up the headlines, right? Like, it's very noticeable, but it's not actually that many jobs.
Nick Bunker 13:03
Yeah, it's a lot of these like tech giants, their share of the stock market is much, much, much larger than the share.
Mike Simonsen 13:09
Right? Right. Right. Oh, wow. That's really fascinating, then then. Okay, so then, you know, what I'm trying to get my head around is, so it's January, jobs look great. Or almost great in most sectors, jobs are hot. So how long does that last? So at some point, we have a cycle. Some point we go through, is it too early? Or like to say, is it too early to say that 2023? is like, Could we have a jobs recession in 2023? Or can we? Or is there signals that give us confidence? How fast can it turn?
Nick Bunker 13:51
Yeah, so I think there's definitely a possibility of the jobs recession this year, for sure. I think, in fact, if you look at, say, surveys of economists, it's roughly 5050 right now about the chair that think that will the US will enter recession this year. For those who don't, I think, part of the narrative, that part of the stock war, part of the stories in which the US did not enter a recession is because of the continued strength of the US labor market. But there's there's definitely possibility, I think, one force that could lead us there is just the federal as sort of folks in the housing space. Well, no, the Federal Circuit, a lot of hiking last year, and those effects are still working their way through the economy. So I think that's definitely a possibility that that's a big constraint on the US economy continues to sloping down with the background of a labor market is still hot, but is, you know, the temperature has come down a little bit. There are signs on moderation and there are some leading indicators that are slowing down. I don't think they're necessarily you know, they're sort of they're blinking yellow lights and not blinking red lights right now. So there are some signs there. that things are cooling down, it's or slowing down. But it's just that in 2022, things are moving very rapidly. So might take some time for things to stop, or to maybe stop torturing this metaphor for us to tip into a recession.
Mike Simonsen 15:14
Yeah. Okay. So that's really, really useful framework. So things, there's still things are still hot. There are some signals, obviously, some of the sectors we can see slowing down, but in general, you know, because employment is still and and the, the total number of job availability is still at record levels, we have, we've got some momentum for two before that can change before that would shift to unemployment spiking to a scary number. Is that right?
Nick Bunker 15:48
Correct. is clearly underlying momentum. Yep.
Mike Simonsen 15:52
There is underlying momentum in our favor. Still, at this point in laughter, you know, 10% on, you know, 14% on with a V or 8% over the hair. Right. We're like, we're almost almost done with that. So, so then the question is, that, um, so the quick sidebar is what's your take on recession coming this year?
Nick Bunker 16:16
Yeah. So I think I mentioned earlier, I do think my view is, it depends a lot on how the Federal Reserve thinks they're doing that. If, like I said, there are signs of moderation. So earlier mentioned, wage growth is still strong. The story depends a little bit on what metric you're looking at. But there are signs that wage growth is moderating. And it's coming down from these really elevated levels down to where they were, they're normalized very closer to what we've seen back and say, 2019, which was still a hot labor market, but not 105 degree temperature we saw in 2022. And now, the Fed right now is really concerned about wage growth, because they think that's a potential source or more fuel for inflation. So if that's sort of some moderate, then maybe the Fed starts to think, okay, hey, like, we can really back off, we don't need to hike more. And I think that will make me feel more confident about the chances have diminished the my probability of recession happening that later this year, just because the parts of the economy that are more sensitive to interest rates, they won't have less sort of pain inflicted on they'll have less pain inflicted on them. So there'll be less need to shed workers, there'll be more sort of growth in sort of household income, which can sustain consumption, which is the major source of economic growth in the US.
Mike Simonsen 17:34
Okay. And and do you look at speaking of rates, do you? Do you look at the yield curve and use that as, like the yield curve says recession? What do you think of that?
Nick Bunker 17:48
Yeah, so I'll caveat this with like, I'm not a like a forecaster at all. But I do think there's a bunch of different leading indicators and not and the, the yield curve is definitely one that is, among a variety and sort of the financial sector that are like, they are blinking red lights, for sure. I think my view is that there have been a lot of, you know, solid rules of thumb, or like guidelines for how to understand the US economy. And then around the spring of 2020, the house stopped working. And it's it is probably it's famous last words in economics say these times. But I hesitate to say that they're like, ironclad rules anymore, after everything we've seen over that. Now, almost three years.
Mike Simonsen 18:30
Yeah, I think about that, too. They, the, it could very well be that the you know, we have bullwhip effects in all of these demand and lumber prices up and down. And, and we had, you know, we had the the housing markets, Insanity, and then super cold in the same year. And so like, how do you like the normal rules of thumb are out of like, it could very well be that the bond market is still trying to absorb the crazy bullwhip effects of the pandemic economy. And therefore, that's actually yeah. Interesting. Okay. Well, so, you know, one of the risks I'm gonna be worried about is, is that housing now in January is actually coming in stronger than I expected, and prices are stronger and indicators of demand are stronger. And, you know, where if if the Fed is looking at wage growth starting to subside and feeling like their rate hikes have done enough? They've also been using housing as a as a metric. And if housing is not subsiding, does that mean that housing forces the Fed to to keep raising and keep the throttle on down on on the rest of the economy?
Nick Bunker 19:57
Yeah, I think that is I've been thinking I've been thinking about that for the broader economy as well. You know, we're talking a day before the q4 GDP numbers come out. And there's some expectation that that number could be like fairly robust or that the economy continues. GDP has still substantive, substantial momentum there. And one of the good signs of the past few months has been that inflation is moderating. So it's wage growth. But it looks like inflation is monitoring more than wage growth right now, which means more people are getting inflation adjusted raises, which is just great news. But also that means there's more like economic strength there, there's more real income growth, potentially more consumption. So the question is, you know, does the Fed get spooked by stronger economic growth? Or is it just sort of React preemptively? It's afraid that like through inflation more, or does it, say, Okay, well, let's actually just keep an eye on inflation itself, and see if that can moderate while there's underlying economic growth, from what they've said, they seem to think that we need below or below trend growth in order to moderate inflation. So the question is, you know, if they stick to that, or did they say, hey, well, you know, who are you going to trust your sort of your your DSGE models or your eyes? You can see inflation data?
Mike Simonsen 21:17
Yeah, it's okay. That brings up a great point that I'm interested in housing. So housing affordability, right, affordability has been a big, big challenge. We had home prices spiked way up. And then mortgage rates climbed. And so now the payments are significantly higher than they were gonna have ever been. Right. It's an affordability is a challenge. One of the ways we mitigate affordability challenges is with wage growth. And with wage growth that outpaces inflation. Has wage growth been behind inflation? Is it getting ahead? Is is that going to help housing? Or is it? Is it going to get worse for homebuyers? Like we're looking around the world?
Nick Bunker 22:03
Yeah, so I think for businesses, inflation really kicked off in the spring of 2021. Also, when wage growth start kicking off, on average, most most, on average, inflation has grown faster than that wage growth has been this period where diversity metrics, we've seen wage growth that at levels above anything we've seen over two decades, multi decade highs, but inflation has been even, you know, as if the highest spins since the late 70s, early 80s. And they're both start to moderate. It's just that inflation looks like it's moderating more. And I think the question is, is sort of a, it's a, it's a race, between inflation between prices and wages, which one's going to slow down more first, and right now, it does look like inflation is falling faster. Now, part of that is energy prices, which have come down quite a bit. So maybe that sort of, it falls faster. And then wages. You know, then it's like the next chunk, which falls faster after that period. But there is the possibility that we have a period where nominal wage growth, moderates slows down, but inflation just falls faster. So we have, you know, again, continued underlying momentum, where there's strong demand to keep the labour market tight Wildish moderates. So I think we were talking earlier about headlines about you know, tech, as I have a story that came out yesterday was that Walmart has announced its raising its sort of wages from $12 to 14. That's, you know, far more people at Walmart than work at, say, meta, or Amazon, or meta or, you know, Google there's, it's going to affect more folks. And also, it's reflective of labor market trends for the kinds of, you know, industries or workers who worked at Walmart, which are far more people and I said, you know, on average, inflation has outpaced wages. Actually, it's the low end of the wages distribution seem more real wage gains, it's that middle to higher part. That's like behind, and if we start to see inflation come down, it'll actually more people see real wages, real wage gains,
Mike Simonsen 24:04
more people. So there's a there is there's a decent chance that this year that more of the population sees real wage gains. Is that a good way to summer that summarise that. Okay, theory, although it's interesting, you know, in during that at the start of the pandemic, here, we had big unemployment, but the people who were unemployed at the time it was, you know, it didn't stop the housing market at all, because the people who are unemployed were, were the the the low salary service workers who are already locked out of the housing market, the home purchase market, and so those folks are now the ones really seeing the most gains. Is that true?
Nick Bunker 24:46
Yeah, it is. It is. The sectors that have seen the fastest wage growth have been bars, restaurants, retail hotels, which Florida distribution and they've actually seen for many for many workers in those industries, which one has outpaced? It is the it is. It's wage growth, middle, the top that actually has been not as robust. So it's actually been a period of declining wage inequality, where just faster at the bottom. So yeah, when, of course, when you think about the housing market, it's the folks most likely to buy who have been the ones who seen a bigger hit or constraint on their real, real earnings, because their wage growth hasn't been as strong.
Mike Simonsen 25:31
So that is sort of like we can see the current trends in wages is probably not providing much tailwind for housing, but probably better for the fabric of society. But potentially, potentially, potentially. Okay, well, I'll take that as a win.
Nick Bunker 25:53
Yes, I think I think in the in the realm of, you know, back in 2019, I think there was, you could see, seeing the signs of this was starting to happen, that lower wage growth was like picking up their pre pandemic. So say 2019 2018 2018, waymark was tight enough, lower wage workers were worried industries, wage growth was picking up. And it was, you know, a very positive development, which is inequality coming down and sort of a pandemic hit. And the initial shock was, oh, boy, this is going to undo all the progress. We came there. But just because of the way, the sort of, you know, the whiplash nature of the labour market, and especially in 2021, with everything reopening actually gave those workers sort of bargaining power, increased competition for them. And now it's sort of we're seeing wage gains per se. The accommodation food services, which is bars, restaurants, that if you told me in 2019, that was the wage gains we're seeing now, which is moderate from where they were in 2021. I'm like, Oh, my gosh, that's amazing what happened? And I knew I would fill my pants past self, and I'd be a bit horrified.
Mike Simonsen 26:51
Yeah. All right. That is really great information. For me, that's very helpful for me to understand the trends for the year. I have a couple other things that I'm very interesting with related to housing, and labour markets. The big trend of course of the last few years, is the remote work coming on. Do you have a view? They have you have data on on that maybe from Indeed that that impacts that you have a view? And then do you have a view about longer term trends as well? I'm interested in both of those.
Nick Bunker 27:22
Yeah, so I think the short answer on remote work is it's here to stay. Now, it might not take the it's definitely not going to take the form that said, many people got introduced to remote work, which is spring 2020, working from the kitchen table. But I think that what we've seen so far is that this is an enduring trend. So my colleagues did research looking at the trends in the share of job postings on Indeed, that are advertising remote work, looked at that across 20 different countries. So these are all higher income countries and looked at basically, the transport and so, you know, 2019, or 2020, relatively low. Pandemic hits, lockdowns happen, all this restrictions, but it jumps out, as employers have, say, okay, like, we can hire people, but needs to be done remotely. And then those restrictions slowly get taken off it. The timing varies by country location. But as I've taken away, the share of job postings really isn't elevated, you know, we continue to track this. So in the US the share job postings that advertise remote work, they stated we have, it's still 3x what it was back in, say 2019. So it's still almost, it's more than three times I think it's three and a half times higher. Now, that was pre pandemic. Now, variation, and the kinds of jobs have been done remotely. Software generally jobs, about 40% of those advertised remote work, which makes sense, because the kind of jobs that you can, you can sort of do with a laptop and an electrical outlet. There are software programmers out there, like I think I need a little bit more than that. But I'm going to call on with some hand waving here. And there are other jobs, which requires you to have face to face contact, and most jobs do require face to face contact. So it's somewhere in the vicinity of 30 to 40 to 45%. jobs can be done remotely. But what we found is that a lot of jobs that could be done remotely start technologically but weren't before. People found that they like that. So it does look like it's going to stick around it works. Players have found it works. Some of them maybe provisionally admitting that and jobseekers definitely are really interested in it, because we can all see searches on Indeed. And it's about somewhere in the city of nine to 10% of all searches on the platform contain words related to remote work. So there's job seeker appetite and employer demand for it has stayed elevated as well.
Mike Simonsen 29:40
So 10% of job searchers are like looking for that as sort of a requirements of their work.
Nick Bunker 29:47
Yeah. Or at least testing the grounds to see okay, what can I get? Yeah, just look for remote
Mike Simonsen 29:52
temperature. It's actually lighter than I would have expected. I would have expected that sort of like everybody's at least first going for that instead.
Nick Bunker 30:00
Uh, yeah, I would say it is there's you can imagine, maybe that's like, I think it's that but I also think is the if you think about the search process now, I you can imagine someone just saying, I just want a remote job typing in remote feels. Imagine someone saying, I want an economist, job search an economist. And then the first thing to do on average, I was like, does this have remote? Does this have remote does? Not. Okay, I'm not interested. So I think it's just a matter of how, how, how, what, at what stage people are filtering for remote work?
Mike Simonsen 30:30
Sure. Fair enough. Fair enough. But but the initial search 10% of them are looking like the which would imply that's like, the first thing I want is a remote job. The next thing I want is what's that job do? What are my responsibilities? That's that sense? That's actually a lot, right.
Nick Bunker 30:49
Yeah. And that's especially because pre pandemic it was closer to like, two, two and a half percent. So it's jumped a lot.
Mike Simonsen 30:53
Right. Okay. Yeah, that's cool. Do you guys have data on like, salary implications of that of being remote?
Nick Bunker 31:03
Like, so we don't? Sorry.
Mike Simonsen 31:05
I was gonna say like, you know, the, like, you know, the, if you're working for Google, or you know, like, there's some talk about do you get your salary? You get your silicon, your San Francisco salary, if you live in, you know, Omaha?
Nick Bunker 31:20
Yeah. So I think there is, I think that is, that's the territory. I think that like the labor market employers, job seekers, and researchers to figure out is remote encompasses, you know, again, characterizing here, like sort of two forms of remote work. There's fully remote, which is, you live, say, there's you live, wherever you want and say, the United States of America, but your employer is based anywhere else, or hybrid, which is, you live in the same if you live within a commuting distance of your job, but you're required to go in certain days. So they're in the case where the job can be done is a hybrid remote form, you're still still tethered to sort of local labor markets. So you're, if you're in, say, say your company is based in Boston, sort of your wages are going to be still dictated roughly what is happening in the Boston Market, other employers that work it but if you're available anywhere in the US, then that's when you start to get like a national labor market. So that if competition starts is, you know, turns out the competition with the National labor market is equivalent to like what the wages you would have gotten San Francisco, it doesn't matter. If you live in Omaha, you can still get those prices. Now. There's, it's unclear how many of those jobs right now are fully remote in the sense of like you can live wherever versus how many are still, it's, you know, you're still going into the office one or two days a week. So they're still it. It's so remote more of a spectrum rather than I'm anywhere or I'm in an office five days a week.
Mike Simonsen 32:51
Yeah. Do you have a give a view to tie this back to our recession and our employment discussion earlier? Do you have a view is, as we have people more remote, more work from home, does that give the the job market more or less resiliency, like is that procyclical? Or is it counter cyclical? Do you like so procyclical in my mind would be like, Oh, well, Joe lives in Omaha. Let's cut Joe first. And let's cut them faster than the people who I'm working with. Maybe it's counter cyclical, though, is like, oh, Joe's a lot less expensive. So we don't have to cut it. I don't know. Like, what do you have a view? Is there any data on that yet? Or do you have an opinion? Even?
Nick Bunker 33:34
Yes, I think that we, we haven't experienced a downturn yet with like systematic or like highly utilised remote work. So I think when that happens, and hopefully it's hopefully it's awhile from now, we'll find out. But I do think it does, I think remote work can have can help the bottom line in a variety of ways. One, you know, hey, Joe works. In Omaha, he's not as expensive. But also, hey, Larry, and Fred only come into the office three or two days a week. Because the three even though we're hybrid, maybe we can use less office space. So you can save that way. Like there's other margins, you can downgrade. Honestly, if costs are you that, hey, we're going through a tough period, we're just going to stop using Office three, we're gonna like, end our lease. You're all like, temporarily, fully remote. Or you can make that margin where it's like, okay, we don't have to use the office space anymore. There's maybe less overhead that way. But yeah, it's sort of unclear. Maybe there's also it is, you hire someone in the national market. And then you realise like, maybe we haven't been getting so much at a job if he's even guess he's worth less than maybe he's not maybe sorry. Maybe he's less expensive, but maybe the value propositions in there quite yet. It's unclear to me how it shakes out
Mike Simonsen 34:39
how it shakes out, Yeah, my gut says it's, it's probably adds to the resiliency of companies like it adds, it adds strength, cost savings and stuff and therefore is counter cyclical helps. My gut says that, but I'm really interested to see if we get some data that that shows that to be true
Nick Bunker 34:59
the one data thing I will note is that it's not quite an outright recession. But obviously the tech sector has pulled a lot back, pull back quite a bit on the hiring front. But in our data, we're looking not only just at the share of all postings and advertise remote work was also say, different sort of job categories. So while software development jobs, for example, have really pulled back, if you look at the share of job postings in that sector that like the remote share of those job postings, it's actually stayed fairly consistent. So it actually looks like as employers just be like, Okay, we're gonna do less hiring people. But we're, they're not pulling back on the usage or advertisement of remote work, which suggests that, hey, they're pulling back, but either the labor market still tight enough, we're gonna use this to appeal to people, or we're still bought into it, that even if we're pulling back, pulling people off, we are going to keep it, we're going to keep remote work around
Mike Simonsen 35:55
interesting. And it could be that, like, I'm gonna lay off these people and in San Francisco, and the people I'm going to hire are going to be in lower cost parts of the country to backfill it,
Nick Bunker 36:05
potentially, or just that we're going to let go of these people, because they are part of business line, that or function that we don't need any more. And then we can, we'll keep these folks around in the metro area, but like, also, like, maybe you can cut back on some of his office spending, or just like, we know, we need to keep remote work around in order to not lose them to another employer or another industry.
Mike Simonsen 36:28
That's okay. I appreciate that. And so implications for housing, then, you know, feel like, we, we know that the trend does feel like it's here to stay, it feels like it is across the economy. And, and though the part of the trend is the hybrid trend that you mentioned, it's a spectrum, it's not fully remote. And if I've got to be in the office, you know, one or two days a week, that gives me a bigger radius around San Francisco, but it doesn't give me it. So that implies the excerpts have more opportunity than then like a fully remote, like moving to, you know, Hawaii during the fight. You know, or Whitefish, Montana, that, you know, people bought a ranch and moved out of New York City does that. Yeah, you seem like you're.
Nick Bunker 37:22
And I think that's we've, we've seen evidence that that has happened. There's some research on NYCLU as an economist at Stanford and some amazing research on remote work don't affect that, like, actually, you've seen housing prices, like further out from Metro centers go faster they can that is sort of the shifts in labor market, sort of the advent of remote work in particularly hybrid, it's really shifted sort of within Metro trends rather than cross Metro trends. That people, if it's, in some ways, it's sort of if you're gonna go into the office, and you have like, a set amount of time you want to spend on commuting, if you only have to go in two or three days a week, or one or two days a week. Hey, what's a longer commute, if I'm only doing it once or twice a week, as opposed to five days a week? I know, I just personally die for folks who are buying houses, and my commute will be x so long. But then if like they have a real job, like Yeah, but I'm not going to do it as much. So actually, like my commute time isn't as much as I thought. So I think that it sort of so far, the form of remote work we've seen so far, which seem to be predominantly hybrid, it's more within an metro area
Mike Simonsen 38:31
in the metro. That is terrific. I may love to talk to Nick Blum on that topic. Let's see, are there other signals in the Indeed data that that that are saying something cool, that are interesting, anything counter to the headlines or the site case? What you know, anything that you have?
Nick Bunker 38:51
So I wouldn't say anything counter? I would say something that I think it's interesting that we released relatively new I think this goes back to sort of were talking about earlier is we now have what we're calling the indie wage tracker, which is we are tracking what has happened to the growth in wages or salaries advertised in job listings or job postings on Indeed. So it's like our measure of wage growth. And the reason why I think it's it's interesting is two is one is sort of the salaries or wages that are advertised and job postings. You mentioned, that's the sort of thing that is going to lead other wage metrics. Because it's, you know, what is the cost of hiring someone right now, a new higher marginal hire, as opposed to other measures of wage growth that you get from official statistics, which are, know what's happening to wage growth for people who've been at the company for five years, people have been in a company for one year, new hires, someone who just got unemployed was employed and just got a new job, sort of confounds that and this can give you hopefully, potentially some signal of what's happening before in the most, the market that's most sensitive to the health of labor markets. Just new hires. And that's that potential. And what we've seen, in fact is that our thinking waves tracker data really jumped in 2021. It seems to have peaked in 2022, March, March of last year at about 9%. But it's been coming down since then. And now it's closer to 6.3%. So it's sort of all the switch rows, messages jumps in 21. And so the spring when the economy reopened, our data jumped more. They started moderating in a moderated about three to six months before the other measures did, and now they're starting to trend down. And we're seeing continued moderation. So I think it's relevant for household income growth, that there's some moderation there. But I think it is a similar story. were saying earlier that it's really these lower wage in person jobs, that are really strong growth and are watering now. And it's that the higher end jobs have seen lower growth than the low wage jobs, but they're still elevated for what they were, say back in 2019. So I think that's a new and interesting thing that's come out from us.
Mike Simonsen 41:06
Sure. And and anything that we can read in real time that leads the the numbers that we're used to the headline numbers that we're used to is, I think, really powerful.
Nick Bunker 41:16
Do you find Yeah, and I think it's Sorry, I was
Mike Simonsen 41:18
gonna say, do you find that? Is it? Is it easy? Or is it difficult to, to correlate that to, like, get the correlation to the predictive of the of the headlines that are going to be announced?
Nick Bunker 41:31
Yeah, so I think it is one thing that we often think about when we're like building these projects is, you know, we want to make sure there's like representative as possible of the overall labor market, you know, we, our job postings data, which we release weekly, our job postings index, which record was like, okay, one of the benefits of working entities, we have all this tremendous data, but also, you know, going in doing our due diligence, all that stuff, the nice thing is that is representative, we are seeing our data, essentially track, you know, in our job postings index was really like a sprint project that happened in the spring of 2020. To be like, hey, the economy appears to be falling apart, we should try to track this stuff. And what we've seen is that Argentina, tracks fairly well, with the official statistics on say, job openings, which the government puts out, sometimes our data is almost two months ahead of them. So it's been encouraging to see on the job postings, job openings, front that are speaking the 25th of January next week, we'll get the data for the end of December, I've got data for almost the end of January, for the most part, it does look like it's a leading indicator. So I think, you know, we do our due diligence, but it's been but then, you know, we test it by putting it out there, you know, being transparent about work checking in, it's gratifying to see that it matches up with what other people are seeing in their data.
Mike Simonsen 42:48
That's really, really terrific. Given all that and the stuff that you could see now and and the stuff that we're anticipating coming out GDP numbers and, and and a year employment numbers and things like that, what are you? What are you excited about are looking for, to inform your view of the year?
Nick Bunker 43:09
So I think there's there's three things like labor market specific releases that looking at and there's sort of three, I guess there's three things I'm honing in on each of them. So first up sort of chronologically is returned to wage growth. There's this measure from the BLS called the employment cost index, which is a measure that it accounts for the changing sort of composition of the labor market for both occupations industries, sort of, you know, it's exciting to like the highest quality wage growth measure, and the Fed has really been harping on this is something we're gonna watch to understand state of wage growth. And this is data for the fourth quarter of 2022. The q3 data showed some slowdown there. So I think seeing how does that continue? Is there a clear, definitive cooldown there, and then we're getting the job openings and labor turnover survey, which is that economic release as the job openings, numbers, but the number I'm looking out for is the quiz rate. So it's the share of people voluntarily leaving their job. That's one to 10. That's a statistic that correlates well with wage growth. Just think about people leaving their jobs most part, they're taking new jobs. And the way to get convinced to a new job most the time is higher wage. So if that number, it's come down a little bit from 21 highs, but as moderate a little bit. So if that number stays up, makes you some stronger wage growth. And then we'll get the jobs report, which is like the big one the big Friday for us. And I'll be keeping an eye on what's happening to sort of pace of job gains in leisure and hospitality, which is the very constrained sector that has been inserted. It dropped tremendously during the pandemic, the early days, the pandemic has bounced back is still below pre pandemic levels. So if there's, you know, if restaurants and bars are still adding workers, if there's still some strong momentum there, I think that's a sign that consumers are maybe still spending money as less on goods and more on going out to eat. And that's just more underlying strength from the American consumer, which could continue to power economic growth.
Mike Simonsen 45:09
So that's that's a nice insight. So I should pay attention to leisure and hospitality hiring in the next week or so whenever that comes out. And to know that if that's strong, that is maybe another positive signal for avoiding recession this year. Would that be Would you would you characterize it that way?
Nick Bunker 45:34
I would, in that, I think for two reasons. One, if there is continued strength there, that means employers think there's going to be continued demand for what are we sure services, it's right there in the name and it sort of discretionary spending, but also that if those folks continue to focus in keeping employed, that's, that's more wage growth, more employment growth, more income growth in the economy, which has that forcing cycle, more employment for people who tend to spend more of their money, so that can ripple out rich?
Mike Simonsen 46:09
Terrific, terrific, terrific. This has been really great. And we just powered through almost an hour really, really fast. Do you? So let's make sure people can follow you and your research and stuff. Where to where do we where do we go?
Nick Bunker 46:22
Yeah. So if you're interested in Hiring Labs Research, you can go to hiringlab.org. And if you want to download any of the job postings, as I mentioned, you just go to hiringlab.org/data. You remember, if you want to follow me on social media, probably best spot is Twitter, at Nick underscore Bunker.
Mike Simonsen 46:38
Nick underscore Bunker on Twitter. Yeah, and I love you know, keeping an eye on on the labor market takes and and like it's a really important function for us in housing this year. If if people start losing jobs, then then there are downstream implications of for housing demand. And but but And conversely, everybody's employed right now. And and so one of the things that is keeping that's keeping a floor on any housing market correction, because there are people who are still buying homes and we have inventory is tight enough that there that the affordability problems, like there's few there's they don't have to be affordability for everybody. It's it's only for the you know, a smaller number because there's only a small number of homes available for people to buy. It's a really fascinating time in that but but you know, assuming freights climb and employment, unemployment claims like those would be those are two factors that I'd be watching to to have a housing market resumed the down the downturn we saw last fall, Nick, such such great information. Thank you so much for joining us, Nick Bunker from Indeed.com and the the Indeed.com Hiring Labs. So that's hiring lab.org And everybody this is the Top of Mind podcast. Thank you all for joining us again. We'll be back in a week or two with more more data on the housing market. Thanks, everybody.
Outro 48:13
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