HRchat Podcast

US Labor Market: Tech Trends with Svenja Gudell, Indeed

July 31, 2024 • The HR Gazette • Season 1 • Episode 731

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What does the future hold for the US labor market? Join us on the HRchat Show for an insightful conversation with Svenja Gudell, Chief Economist at Indeed. Svenja is also on the World Economic Forum's Global Future Council on the Future of Job Creation.

We also delve into the transformative impact of AI on the labor market. Learn how generative AI tools like ChatGPT and Copilot are reshaping job roles, and enhancing productivity while underscoring the irreplaceable value of human skills such as critical thinking and empathy. 

Questions for Svenja include: 

  • What is the state of the U.S. labor market and how are recent trends shaping the current landscape?
  • How is AI influencing labor market dynamics, particularly in terms of job availability and job types?
  • Which jobs will be impacted the most by AI and which jobs already are? 
  • How are employers adapting their hiring practices to prioritize skills over traditional qualifications?
  • What are the primary reasons behind the preference for skills-first hiring strategies in industries that are adopting AI?
  • Do you foresee this trend toward skills-first hiring continuing to expand across different sectors in the future?
  • Tell us about the World Economic Forum's Global Future Council on the Future of Job Creation 



We do our best to ensure editorial objectivity. The views and ideas shared by our guests and sponsors are entirely independent of The HR Gazette, HRchat Podcast and Iceni Media Inc.


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Speaker 1:

Welcome to the HR Chat Show, one of the world's most downloaded and shared podcasts designed for HR pros, talent execs, tech enthusiasts and business leaders. For hundreds more episodes and what's new in the world of work, subscribe to the show, follow us on social media and visit hrgazettecom and visit HRGazettecom.

Speaker 2:

Welcome to another episode of the HR Chat Show. Hello listeners, this is your host today, bill Badham, and joining me on this episode is Svenja Gudel, chief Economist at Indeed. Svenja is also on the World Economic Forum's Global Future Council on the Future of Job Creation, and in this episode we're going to talk all about jobs and AI. Svenja, it's my pleasure to welcome you to the show today. Thank you very much for being my guest.

Speaker 3:

Bill, thanks for having me. It's great to be here.

Speaker 2:

So, beyond my wee introduction just a moment ago, Svenja, why don't you start by taking a minute or two and telling our listeners all about yourself, your career background and what you get up to over at Indeed?

Speaker 3:

Sure, so I'm the chief economist at Indeed. I have a fabulous team. It's the hiring lab and it's a group of economists and data scientists and we get to dig into data to be able to answer the latest burning questions that you might have about the labor market. So we track trends across eight different countries and we try to see what is brand new, what is developing, and we really try to dig into supply, demand of labor, what type of jobs are out there, how AI is impacting the labor market. So any sort of labor market questions you have, we hopefully will have an answer for you.

Speaker 2:

Rock and roll. Thank you very much. Okay, so let's talk about the labor market then. What is the state of the US labor market, labor market at the moment, and how are recent trends shaping the current landscape?

Speaker 3:

You know, overall the labor market has been on this trajectory of cooling, which is actually good news because if you think back two or so years or two and a half years, at this point it was pretty hot. It was unsustainably hot. We saw extremely strong wage growth. We saw extremely strong demands and also fairly limited supply coming out of the pandemic in terms of how many workers were available to work. So all these things have kind of rebalanced themselves over the last few years and we've been on this path of cooling all while unemployment has remained relatively low. We are not seeing massive layoffs out there. So it's actually a pretty, pretty good trajectory that we're on right now. Things are looking relatively sustainable and good for the long term and we're back to roughly pre-pandemic levels of wage growth.

Speaker 3:

If you look at that, we still see somewhat outsized demand for labor, particularly in some sectors. A lot of care sectors, for example, see a lot of demand. So I think nurses, dentists, pas, any sort of very hands-on sectors are still seeing a lot of demand. Any sort of very hands-on sectors are still seeing a lot of demand, whereas if you find yourself in the tech sector, you might not be seeing very hot demand right now for talent there, but it's starting to come back a little bit. Also, on the labor supply side of things, we're seeing more people entering the labor market, so we're seeing really good labor force participation rates right now, and this holds for the US, but it's certainly mirrored in other countries as well.

Speaker 2:

Thanks for listening to this episode of the HR Chat Podcast. If you enjoy the audio content we produce, you'll love our articles on the HR Gazette. Learn more at hrgazettecom. And now back to the show. Okay, so all of these boomers who continue to leave the labor market, what you're saying is that's not causing the issues. That perhaps was a couple of years ago folks coming in, things looking pretty healthy.

Speaker 3:

Yeah, it definitely, for the moment is looking pretty healthy, although I will caution and you bring up an excellent point that as we start to see our overall population age and this will happen over the next, you know it's already happening and will continue to happen over the next 10 to 20 years we will start to face a bit of a demographic cliff, and what I mean by that is that we'll have more and more older people. A lot of them will have left the workforce but are still demanding goods and services, but we will have fewer workers to actually fulfill that demand of goods and services. So it's going to be a little crunchy in terms of that balance between supply and demand in the years to come and that will get interesting. So we're looking at a tight labor market for many years into the future here.

Speaker 2:

So if we think of it as a population pyramid, how does the US population pyramid at the moment compare to others out there? So, for example, everybody knows about Italy and Japan and their population crises. We can look north of the border to Canada. They seem to have a lot fewer young folks who are able to pay for those people going into retirement. Where is the US at the moment in comparison to other major economies?

Speaker 3:

Yeah, most industrialized countries are actually feeling this crunch in terms of having fewer younger workers. However, some countries are dealing with it better in terms of having fewer younger workers. However, some countries are dealing with it better in terms of immigration policies. So if you're looking at, for example, canada and Australia, they're seeing a lot of migration inflows and so are making up part of their shortage of workers by seeing immigration. The US is also seeing a bit of a crunch. We've seen a lot more foreign workers join the workforce, and that has certainly helped us over the last two years as we've built up the share of workers in the US. However, it will become even more important in the future to look at you know what are these flows across different countries and what does immigration policy look like to be able to address a possible worker shortage?

Speaker 2:

Okay, thank you very much. So we are all sitting in different places recording this interview. Today I'm sitting in the UK, honestly, in the UK, and just last week we had an election over here. In fact, it's the year of elections, isn't it? There are elections in lots of huge countries with big populations all around the world India, we've seen French elections very recently as well. There is, I believe, an election coming up in the United States of America. So there is, I believe, an election coming up in the United States of America. What are your predictions or perhaps even Indeed has looked at this, but if not, from your take, what are your predictions for the labor market if we see a second Biden term versus another Trump four years?

Speaker 3:

We actually haven't looked at the details quite yet, haven't looked at the the details, um, uh, quite yet, and it will, um, you know, I think, overall we're we're putting the roots down to, like I said, a fairly sustainable, cooled uh, cooled down from two years ago um a labor market that I expect to roll us right into the next year. So, overall, we're seeing, you know, no, no signs that we're seeing catastrophic increases in unemployment, for example. We're not, we're not seeing large layoffs on the horizon, which is all good, all good news, and it really I think it will really depend on what economic growth is doing. So I think monetary policy and fiscal policy will certainly matter and, as you're thinking about the elections, fiscal policy could certainly swing one way or another. But overall, if we continue to stay on this trajectory, you know, if we continue to stay on this trajectory barring any major surprises in terms of particularly monetary policy, no-transcript.

Speaker 2:

Okay. So what I'm hearing there is regardless of who wins in November, the economy is in a good place and it's theirs to mess up. Is that fair?

Speaker 3:

to say, and maybe ask us again in two months when we've done some more analysis on it.

Speaker 2:

Okay, rock and roll. We'll just have to get you back on the show. Okay, let's talk about AI now, if you don't mind. How is AI influencing labor market dynamics, and particularly in terms of job availability and the types of jobs which are out?

Speaker 3:

there. You asked the 800 pound gorilla question in the room. Of course, you know that is the question I think I get from a ton of people what is AI doing to the labor market? How will it affect the labor market? So we really wanted to take a closer look at Indeed to be able to figure out what will happen in the future here, and so we took a two-stage approach to our research and we wanted to figure out how will AI impact skills right, and how will certain tasks change with the availability, particularly, of generative AI tools? So think chat, gbt, copilot, any of these types of things.

Speaker 3:

And then, of course, if you think about jobs, their collection of skills, and how will, how will those jobs then be impacted, given that some of these skills might be displaced, altered, augmented or not touched at all by particularly Gen AI.

Speaker 3:

So, having done that research, we found out that we looked at millions of job postings in the process and following Indeed's taxonomy of skills, so we went really nitty gritty into this one and we found that virtually every job will be impacted by AI, however to varying degrees, and I think what we found is that Gen AI is not perfect at any job, very far from it Less than actually of jobs, will be heavily impacted by by Gen AI, because the technology just isn't good enough to replace a full human, and we found that the human aspects of these jobs will become a more and more important.

Speaker 3:

So, critical thinking, empathy, leadership all these things that Gen AI isn't particularly good at, still really matter in doing a job well, and will matter even more so in the future, as, hopefully, gen AI will take some of these repetitive tasks off our plates and, will you know, will alter the course and augment the course of a lot of jobs, but that, will you know, pump up the importance of some of these other skills that will make our jobs very human, if you will.

Speaker 3:

And so, while particularly jobs and this one is an interesting one of knowledge workers will be impacted quite a bit, and that's kind of new in this space. I think we didn't really have that with automation. We're seeing that hands-on jobs, a lot of manual labor or, if you need, face-to-face interaction type tasks, those jobs would be less impacted by Gen AI. So think, if you're a driver, a care worker, providing childcare, your job is not as impacted by Gen AI. However, if you're in software development, marketing, hr, you're much more likely to see impacts to your job, but more in the form of augmentation of certain tasks and skills, versus replacing full jobs.

Speaker 4:

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Speaker 2:

Okay. So let's talk more about that 20% you mentioned that are going to be heavily impacted. So let's talk more about that 20% you mentioned that are going to be heavily impacted. How are younger professionals, newer folks, in a particular role? How on earth are they going to get on and do well in their careers if their jobs are being augmented? So, for example, one group you didn't mention just a moment ago, but legal professionals. Example, one group you didn't mention just a moment ago, but legal professionals. Okay, so legal professionals coming in first couple of years.

Speaker 2:

The reality is now there's generative AI for that stuff. You know it may be at a more senior level. There's still need for traditional advice from legal professionals, but from everything that I'm hearing, that that would be a good example of the generative AI can replace their roles at a more junior basis. So how do those sorts of professionals HR folks is another group you mentioned a moment ago, so let's obviously talk about them, because this is an HR podcast. How do they, how do they still get an opportunity to develop a career?

Speaker 3:

Yeah, and I think it really depends on what particular skills and tasks you're talking about as you look at these roles. Right, you mentioned a lawyer. You know chat GPT will not argue your case in court for you, for example. Right, it might really help with some of the background research. And even there I mean be careful, right, and we've certainly heard some stories on that front where Gen AI hasn't performed all that well.

Speaker 3:

On the HR side. I think we're seeing, hopefully we'll make it easier to be able to, you know, summarize certain tasks that take up a lot of time, but the actual human to human interaction is still really important. Oftentimes, as a candidate, you want to hear from a real person, or, if you're figuring out, you know what offer you're getting or more about the company. You want to talk to an actual human being. You don't want some some robot telling you more about it or presenting an offer to you, right? So I think there are certain aspects of that job that will be taken over or again augmented by AI, but other aspects won't be. So hopefully we'll be able to get better at matching and the speed of matching. We'll be able to figure out what people go with what jobs and how to organize that all in a speedier fashion. But we won't lose that human interaction component, because that, I think, remains really, really important.

Speaker 3:

And I will say that, as an economist, what I get excited about really for any profession when you think about the impact of AI, is that there's a lot of potential for productivity increases here right, and so that is good news. If we can do more with our time and hopefully spend it on higher ROI type activities right. If you can make more of an impact with some of your time and give the tedious work or the work that's taking forever, but it's not a whole lot of payoff, but it's got to get done If you can give that away to a machine for lack of a better word there and take on some of these other tasks that are higher value, then that's good news at the end of the day.

Speaker 2:

Folks are getting loads more time, time. Let's talk about white collar workers. Let's focus on them for a minute. Uh, so they're getting always extra time because their jobs are getting augmented. Are we, are we on this slippery slope, or this wonderful path, depending on your perspective, uh, towards a four-day work week, then?

Speaker 3:

Well, I can tell you that, so far at least. I know they did some experiments in the UK. Actually that showed some very promising results. I can tell you, personally I would not mind a four-day workweek. But in the US, when we're looking at the research and we actually take a look at how many job postings specify a four-week work week, we're looking at a tiny share. So it's not ready for the main stage quite yet. I don't know if it ever will be. But there's that promise, like I said, of productivity increases. So maybe you can get away with doing the same amount of work in four days as you did in five days. But most likely we'll also see companies wanting to output more and investing more and being able to take up that additional time with other tasks.

Speaker 4:

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Speaker 2:

A shameless plug here. Listeners Regular listeners of this show will know that I'm not afraid of a shameless plug. Please do check out the episode I recorded with Joe O'Connor, whose organization is all about the four-day work week. He goes all around Canada, the US and elsewhere telling people how awesome it is as an idea. He also spoke at the most recent Disrupt HR Buffalo event, where I was the co-host, and he was marvelous. So there's a video somewhere online with that. Anyway, enough of the shameless plugs. Let's get back to our conversation. So what are the primary reasons behind the preference for skills-first hiring strategies in industries that are adopting AI? We talk about skills-based hiring a lot on this show. It's not a new thing, but all of the resumes that you pass through your technology you guys must have some pretty amazing data around this.

Speaker 3:

Oh yeah, absolutely, and it's certainly one of the trends we've been watching closely, trying to dig into what's really going on with skills first hiring, and to me this has emerged out of a trend that we've taken with us from the pandemic times, where labor markets were incredibly tight. So if you're out there as an employer, an HR professional, most of the time when talking to these individuals, everyone would say, hey, it's been really hard finding workers right, finding people to actually apply to my jobs, um, has been really hard and that was, you know, particularly two years ago um, really the the one of the driving, um uh challenges that I saw out there. And when it comes to attracting talent, one of the really smart things to do is widen your talent pool so you can tap populations that you perhaps used to not tap. But one of the things you can very actively do is think about what disqualifying criteria you're including in your job postings when you're narrowing down the pool of potential candidates. And, of course, one of the things is having a, for example, four-year degree, a college degree, or having at least 10 years of experience, or 15 years, whatever it may be, and these oftentimes are signals right when you're, you don't actually know if this person can perform the job, but one way to kind of sort of gauge that as well have they gone to college and hopefully taken a course on this? Or, you know, have they do? They have a bunch of work experience that I think will tell me that they hopefully can do this job.

Speaker 3:

Instead of taking on these signals, specifically checking on the skills, so being able to see, can you actually do it, maybe you do a skills-based assessment and ask, hey, can you please write this for me? Can you do? If you're trying to hire someone who is really good at doing podcasts, show me some previous podcasts or do a podcast with me, or tell me what type of questions you would ask, or whatever it is to be able to figure out the skills needed to do a particular job. And so what we've discovered is that the number of postings across the board that require educational or that have educational requirements listed have decreased, and particularly we see that for high school degrees, two-year degrees, four-year degrees, master's, phds it's across the board, and when looking at particularly four-year degrees two-year degrees, four-year degrees, master's, phds it's across the board, and when looking at particularly four-year degrees, we've seen that come down from roughly 21% to almost somewhere around 17 to 18% of all job postings.

Speaker 3:

That doesn't sound like a huge decrease, but we're talking hundreds of thousands of job postings that were impacted by this and I think that's good news all around. It's good for job seekers who have not had the ability to go to college and have therefore been disqualified from jobs right at the onset, even though they do have the skills to be able to do these jobs, and for employers, this is great because hopefully you'll be able to find someone who can really do that job by concentrating on the skills versus that signaling impact. So we're seeing that, we're hoping that trend will continue and we see that trend, like I said, not only on the educational requirements front, but also on the previous experience front. So what do you actually bring to the table in terms of past working experience?

Speaker 2:

all of that is music to my ears. Uh, it's so sad that you previously got situations where folks would not apply for a job or not get a job because they didn't have that college degree, you know. But they, they, they had the, they had the aptitude. Um, they, they had the other skills, had the aptitude, they, they, they had the other skills. That they could have been a wonderful success, but perhaps they didn't want to take on the burden of all the tuition fees and all the rest of it. So I'm glad to hear things are leveling out. We just got a minute or so left here already, so we could definitely get to get you back on, because I've got a million more questions for you. Just a quick nod to the World Economic Forum's Global Future Council on the Future of Job Creation. You're a member of that. Briefly, tell us about that.

Speaker 3:

Yeah, it's a collection of experts in the field internationally and we really take a closer look at the jobs of tomorrow and what will be impacting the jobs of tomorrow and what's really important to be able to recognize, support and understand along the way. So, looking at geopolitical risks, the impact of the environment, ai is a huge one and north-south migration, demographic shifts you know north-south migration, demographic shifts all these things really play into the jobs of tomorrow and you know where are we seeing population growth and how can we train the workforce of tomorrow and upskill, reskill, provide correct educational support, and what type of jobs are we actually seeing for the future to be able to do that world matching, if you will, on a global scale? So it's a huge topic. It's an absolute pleasure to have really incredibly smart people thinking about all these things and trying to contribute and produce reports, drive thinking and have thought leadership in this space, and I am honored and thrilled to be a part of it.

Speaker 2:

Wonderful. Thank you. And just finally for today, svenja, how can folks connect with you? So maybe that's LinkedIn, perhaps you want to share your email address I bet you're super cool and all over Instagram and places. And, of course, how can they learn about all of the latest reports and other cool things coming out of Indeed?

Speaker 3:

Now it's my turn to shamelessly plug. If you are interested in any of this research I just mentioned, go to hiringlaborg Again hiringlab, one word org. We are Indeed's economic research team and you can find all the research there. I will also put a very special plugin for our data portal, which is relatively new. If you go to the data link on our site, it'll get you to our data portal.

Speaker 3:

As I like to say, perfect Friday night. Download some data, dig around in a glass of wine who knows what insights you'll be able to come up with, and we have it all there for everyone to peruse at your leisure. You can get all of our data products on wages, job postings, AI, remote work. We make it all publicly available for free, and we also have some really interesting AI at work reports that you can download on our site the latest presentations, labor market updates on all the eight countries that we cover. So quite a bit to kind of dig through and look at. There's an email on that site that you can contact us with if you have particular requests or any questions, and, of of course, you can always reach me via linkedin excellent.

Speaker 2:

You can't do better than a pivot table and a glass of wine on a friday night. Totally agree no right that just leads me to say for today, spenya, until the next time, because I'm going to be having you to come back, but until the next time, thank you very much for being my guest thank you, bill.

Speaker 3:

It was a pleasure and I'm happy to come back rock and and roll.

Speaker 2:

We've got that on the recording, Okay, and listeners as always. Until next time, happy working.

Speaker 1:

Thanks for listening to the HR Chat Show. If you enjoyed this episode, why not subscribe and listen to some of the hundreds of episodes published by HR Gazette and remember for what's new in the world of work? Subscribe to the show, follow us on social media and visit hrgazettecom.

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