Employee Concern About Potential Downturn Rises, Recession Mentions +250% Amid Strong Job Market

This Friday, the Bureau of Labor Statistics (BLS) will release the May jobs report. While Americans’ concerns about the health of the economy are growing, the fundamentals of the job market remain strong. Job openings were at a record high in March and a modest slowdown in employer demand is unlikely to significantly crimp hiring. Still, higher interest rates, rising COVID-19 cases in the U.S., supply chain disruptions from lockdowns in China, and evidence of rising layoffs in unemployment insurance claims are concerning for many workers scarred by the uncertainty of early 2020. The question is: how will the slowing economy impact the job market?

Here are three trends we'll be watching for in the May jobs report:

What Glassdoor and Fishbowl data show: 

What are Employees Saying about a Potential Recession?

Although economic indicators are not yet showing a looming recession, consumer indexes indicate that Americans are increasingly concerned. What are employees saying? Glassdoor data provides unique insights into how employees are feeling and what economic trends they are discussing. 

Employee Confidence Wavers Overall, and In Tech

Employees who leave a company review on Glassdoor are asked to gauge their employer's business outlook over the next six months as positive, neutral or negative. Academic research has shown that Glassdoor’s measure of business outlook can provide meaningful insights into  potential future earnings, company news and lending decisions.

Overall, employee business outlook has trended downward over the last month with 16.3 percent of employees in May rating their employer's business outlook as negative, up from 14.7 percent in April. While these shares may seem low, current employees tend to be optimistic about their employer's prospects. The fact that employee confidence is deteriorating modestly is therefore instructive even if employees remain optimistic overall.

In the tech industry, where hiring freezes and layoffs have started as tech stocks fall, the share of employees with a negative business outlook rose from 10.8 percent in April to 14.6 percent in May, the highest level of pessimism since the pandemic began in March 2020.

Company Reviews Discussing Layoffs

Employee discussions of layoffs on Glassdoor are also rising, albeit from a historically low level. The share of Glassdoor reviews mentioning layoff-related keywords rose 11 percent in May 2022 as concerns started to pick up. However, layoffs are still a rare topic of discussion, having dropped by late- 2020 to below pre-pandemic levels as many employers had already laid off so many workers that further layoffs were growing rarer and, by mid-2021, when emergent labor shortages meant employers were holding onto the workers they had.

Fishbowl Discussions of Layoffs and Recession

On Fishbowl by Glassdoor, a platform where professionals can have candid conversations about the workplace, discussions, concerns and questions about layoffs and a potential recession are surging—even if one hasn't yet materialized. Discussions of layoffs on Fishbowl surged 52 percent month-over-month in May from April, rising to the highest level since November 2020. Even more strikingly, discussions about a possible recession surged 250 percent in May from April. This is the highest level of recession-related discussion on Fishbowl since the pandemic began in the U.S. in March 2020.

These conversations span a variety of tones, from speculation to advice on how someone can best “future proof” themselves in case of layoffs or recession:

Conclusion

In summary, employees are clearly concerned about a potential economic downturn. Discussions on Fishbowl by Glassdoor are a leading indicator of sentiment as employees discuss their concerns  in real time. However, we're not yet seeing a spike in layoff-related discussions on Fishbowl or Glassdoor to the level seen during the start of the pandemic, indicating actual layoffs are still subdued. Ultimately, though, employee confidence is weakening and declining business outlook ratings on Glassdoor are a sign that weak economic news—and lingering whiplash from 2020’s economic twists—is taking its toll on employee sentiment.

Employee sentiment is flashing a warning sign. So far, however, the fundamentals of the labor market still appear strong. Job openings were at record highs in March, and, even if the pace slows down, the upcoming May jobs report is likely to show continued hiring and improvements in the job market. With economic storm clouds looming on the horizon, it remains to be seen whether early employee sentiment foretells a labor market slowdown or if recession fears are overhyped.