LinkedIn added its name Tuesday to the list of employers announcing layoffs for white-collar jobs, as coronavirus losses continued to ripple beyond low-wage work to better-paying jobs in auto manufacturing, technology and consulting.
The site, which caters more to professional workers, earns its revenue from fees paid by recruiters, job postings and other sources.
“LinkedIn is not immune to the effects of the global pandemic,” CEO Ryan Roslansky wrote in a note to employees. LinkedIn’s business unit that sells access to its recruiting platform, as well as job postings, “continues to be impacted as fewer companies, including ours, need to hire at the same volume they did previously,” Roslansky wrote.
LinkedIn, which is owned by Microsoft, shared the news the day before the tech giant’s scheduled quarterly earnings report. On Wednesday, Microsoft said LinkedIn “was negatively impacted by the weak job market and reductions in advertising spend,” but its revenue increased 10 percent.
Economists and human resources experts said the job cuts at LinkedIn were further evidence that hiring for white-collar jobs has stalled and did not bode well for a short-term recovery.
“It’s not a great sign,” said Martha Gimbel, senior manager of economic research at Schmidt Futures. “You’re really seeing companies process that this is not a short-run crisis — this is a long-run crisis.” She said businesses are “now realizing that our public health and the health of our economy are inextricably intertwined.”
Job postings saw a boost in May and June but plateaued in late June and early July, said Diane Swonk, chief economist at Grant Thornton. “Because of where it’s positioned, [LinkedIn] is on the front lines of where you would see the pressure of that being reflected.”
Active job postings grew slightly during May and June, according to data from research and advisory firm Gartner, but remain 24 percent below where they were in early February.
“Companies, overall, are still very much operating in a hiring freeze and not opening up their white-collar jobs,” said Gartner vice president Brian Kropp.
Kropp said the biggest cuts in human resources departments were among recruiters, lowering the number of users for LinkedIn’s products for professional recruiters. Companies are broadening the workload of managers, automating more professional jobs and continuing hiring freezes as uncertainty over a rebound continues. “All of that is contributing to a slow rebound in white-collar hiring,” Kropp said.
The Washington Post reported earlier this month that at least 4 million private-sector workers have experienced pay cuts during the pandemic, with salary cuts spreading most rapidly in white-collar industries.
And with so many people out of work — the unemployment rate in June was 11.1 percent, down from 14.7 percent in April but much higher than February’s 3.5 percent — employers have probably had an easier time recruiting. “When you have millions and millions of people unemployed, it’s a buyer’s market,” Gimbel said.
In that environment, employers may not need as much help from premium-priced products like LinkedIn’s recruiting tools. “They’re finely tuned, very powerful tools for a tight labor market when it’s hard to find people,” said industry analyst Josh Bersin. Employers are “probably saying I don’t need quite so much horsepower to find the people I need.”
LinkedIn spokeswoman Darlene Gannon said in an email that LinkedIn is seeing record numbers of hours by users learning on the platform, and that pricing of its recruiting products vary based on customers’ needs.
LinkedIn’s recruiting tools are geared toward sourcing highly skilled professionals who are not actively seeking a job, known as “passive” candidates, who are often more attractive to employers. “It’s a little bit of a replacement for a headhunter. It gives the recruiter a Rolodex,” Bersin said.
In the memo, Roslansky said that LinkedIn has seen “continued momentum” in other business lines, such as its ads and premium subscriptions, which give users features like messaging and the ability to see who’s viewed their profiles.
Employees who lose their jobs will receive a minimum of 10 weeks of severance pay and a year of paid health insurance in the United States and may keep their company cellphones, laptops and other work-from-home equipment, Roslansky wrote. “These are the only layoffs we are planning,” he wrote.
As other employers mull more job cuts, however, there could be lasting effects on the economy.
“This isn’t like in March, when people said to bartenders, ‘We’ll see you in a month.’ ” Gimbel said. “Layoffs that are happening in the white-collar workforce are a severing of the employer-employee relationship. That’s going to scar the economy in the long run.”