Hiring freezes for doctors, lawyers spell trouble for economic recovery, researchers say

Dive Brief:

Employers have changed hiring strategies in response to the COVID-19 pandemic and one, in particular — a disparate reduction in "high-skill" hires — could hinder economic recovery, according to a May working paper from Cornell University researchers.
Employers have cut hiring plans for positions such as doctors, lawyers and CEOs more dramatically than for jobs like those in food service and landscaping. Those changes represent the emergence of "downskilling dynamics" in local labor markets under COVID-19, according to the paper; "They signify a reversal of the upskilling trend observed since the Financial Crisis."
That shift is a "particularly concerning trend" for the economy’s outlook, the researchers said. "This is likely to be detrimental to local government revenues in the near term as reduced hiring into higher wage jobs spells lower income-based tax collections," the paper explained. "In the longer term, this may harm local recovery prospects as the re-hiring costs for high-skill positions will likely be high." The researchers suggested that policymakers consider targeting economic stimulus efforts to firms hiring for high-skill positions, especially in "rural and exurban" areas.

Dive Insight:

Stimulus efforts to date have focused on small business. And that targeting has been warranted, the researchers said; small businesses have been particularly hard hit and those programs were aimed at minimizing job loss.

The paper’s findings regarding disproportionate hiring freezes also may be no surprise to HR professionals. While freezes were identified in one recent survey as employers’ most common pandemic cost-control measure (beating out pay cuts and layoffs), those in essential industries have been hiring front-line workers at a fast clip.

CVS, for example, moved quickly to hire nearly 50,000 workers as store associates, distribution center employees, customer service professionals and home delivery drivers. Grocery chain Kroger hired 100,000 in recent weeks, notably partnering with companies including Marriott International, Waffle House and Sodexo to provide temporary employment for workers in the hard-hit hotel, restaurant and food service industries, HR Dive’s sister site, Grocery Dive, reported.

The researchers predicted that this split will mean high talent acquisition costs. But with a potential prolonged recession on the horizon, HR professionals may find themselves tasked with recruiting for high-skill roles and onboarding these new hires on a reduced budget.