Economists say that the U.S. job market is seeing a low rate of layoffs, but also a low rate of hiring!
The U.S. job market has been relatively still recently, presenting both advantages and challenges for workers. For those who already have a job, companies are retaining their current employees, making layoffs less likely. However, jobseekers are struggling to find new opportunities as employers are slowing down on hiring. Economists at Bank of America described this situation, in a research note Friday (12/06), as a “low-hire, low-fire environment”.
“The labor market is currently characterized by a lack of churn: soft hiring and low layoffs”, they added.
This is frustrating for many workers. A Gallup poll, conducted from Oct. 23 to Nov. 5, 2024, revealed that 51% of employees were actively looking for new jobs, the highest level since 2015. Overall job satisfaction has also dropped to a record low, according to the poll.
Despite the challenges, the job market remains relatively strong by some measures. The unemployment rate in November was 4.2%, close to historical lows seen since the late 1940s. Layoff rates have also stayed minimal, reaching their lowest point since record-keeping began in the early 2000s. However, October’s hiring rate was the lowest since 2013, and the average time spent unemployed rose to 23.7 weeks in November, up from 19.5 weeks a year earlier.
Businesses are focusing more on retaining employees rather than actively recruiting new ones. Many companies are “labor hoarding” due to past struggles to hire workers during intense labor competition, said Cory Stahle, an economist at the job site Indeed.
A Divided Job Market
While the job market remains strong overall, it is not equally robust across all industries. Sectors like healthcare, government, and leisuree and hospitality have seen substantial job growth. In contrast, white-collar industries such as software development, marketing, and media and communications have experienced much slower growth.
“Right now your experience with the labor market will depend on the type of job you’re doing”, Stahle noted.
If the Fed continues lowering interest rates, businesses may increase investments, potentially reviving hiring activity. Until then, competition for jobs is likely to remain tougher than in recent years. For those who are happy in their current roles, there’s a silver lining: job security is at an all-time high.
“People who really want out [of their job] may need to widen their search, expand their parameters, and get a bit uncomfortable and reskill”, suggested Julia Pollak, chief economist at ZipRecruiter.