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The U.S. job market has been stagnant of late, which has both good and bad news for American workers.
On the one hand, businesses are retaining their existing workforce, which means workers are less likely to lose their jobs, economists say. But as employers cut back on hiring, job seekers may also have trouble finding new jobs, economists say.
It’s a “low hiring, low fire environment,” Bank of America economists wrote in a research note on Friday.
“The labor market is currently characterized by a lack of liquidity: recruitment is weak and layoffs are low,” they said.
The news is likely to disappoint many workers: About half, or 51%, of U.S. workers were looking for a new job as of Nov. 1, the highest share since 2015, according to Gallup polling Published on Tuesday. The report found that overall job satisfaction has dropped to an all-time low.
“The Great Resignation” Becomes the “Great Stay”
By many measures, the job market for American workers is strong.
Unemployment rate in November was 4.2% near Historical lows date back to the late 1940s. The layoff rate in October was also at an all-time high lowest Little has changed since 2021, when record-keeping began in the early 2000s.
However, employer hiring sluggish in October: Hiring rates at lowest level lowest Since 2013, the average duration of unemployment has risen to 23.7 weeks in November from 19.5 weeks a year earlier.
Julia Pollak, chief economist at ZipRecruiter, said the current lack of energy in the job market is a blow to many workers.
In 2021 and 2022, as the U.S. economy emerged from its pandemic hibernation, workers quit their jobs at an alarming rate. Job openings have surged to record highs as companies compete for labor by raising wages at the fastest pace in decades, incentivizing workers to leave their jobs in search of better opportunities.
Pollack said the era known as “the great resignation” has been replaced by “the great stay.”
Labor economists say this is due to a number of factors.
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Cory Stahle, an economist at job site Indeed, said many companies have been traumatized by recent experiences struggling to retain workers amid fierce competition for labor and have responded by “labour hoarding.”
Pollack said employers have shifted their policies more toward retention than recruitment.
The labor market is also gradually cooling.
The Federal Reserve will significantly increase borrowing costs starting in 2022 to slow economic growth and curb inflation, thus suppressing the job market. With inflation falling significantly and the labor market sending some warning signs, the central bank began cutting interest rates in September.
A “differentiated” labor market
Staller said that while overall strong, the job market is “fragmented” for workers.
Statler said overall job growth was “robust,” but most of the growth was in a handful of industries such as health care, government, and leisure and hospitality.
Meanwhile, job growth in white-collar fields such as software development, marketing, media and communications is “very, very slow,” he said. “Your current labor market experience will depend on the type of job you are doing,” he said.
Economists say hiring could rebound if the Fed continues to cut interest rates, as employers may be more inclined to invest more in their businesses if borrowing costs are lower.
At the same time, “competition will be fiercer than it was a few years ago,” Stahler said.
He said job seekers should make sure their resumes match the skills listed by employers on job openings, especially since many companies use “applicant tracking systems” to automatically screen applications.
“People who really want to leave their jobs may need to broaden their search, expand their parameters and get a little uncomfortable and reskill,” Pollack said.
But those who have jobs they really enjoy “have more job security than ever before,” she said.
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