The American labor market is currently stagnant

The U.S. labor market has been stagnant lately, a dynamic that brings both good and bad news for American workers.

On the one hand, companies are holding on to their existing workforces, meaning workers are unlikely to lose their jobs, economists said. But it could also be difficult for job seekers to land a new job as employers scale back hiring, economists say.

It’s a “low-hire, low-fire environment,” Bank of America economists wrote in a research note on Friday.

“The labor market is currently characterized by a lack of turnover: soft hiring and few layoffs,” they say.

That news may be disappointing for many workers: About half, or 51%, of U.S. workers were looking for a new job as of Nov. 1, the highest percentage since 2015, according to a Gallup poll published on Tuesday. Overall job satisfaction has fallen to a record low, it emerged.

By many measures, the job market is strong for American workers.

The unemployment rate – which was 4.2% in November – is near historical lows dating back to the late 1940s. The dismissal rate was also at its highest level in October lowest since the early 2000s, when record keeping began, and has changed little since 2021.

However, hiring by employers in October was slow, with hiring at an all-time high lowest since 2013. The average duration of unemployment rose to 23.7 weeks in November, compared to 19.5 weeks a year earlier.

The current lack of dynamism in the labor market means whiplash for many workers, says Julia Pollak, chief economist at ZipRecruiter.

Workers left their jobs at a rapid pace in 2021 and 2022 as the U.S. economy emerged from its pandemic hibernation. Jobs soared to record highs and companies competed for labor by raising wages at the fastest rate in decades, prompting workers to leave their jobs for better opportunities.

This era, called the “great resignation,” has been replaced by the “great abode,” Pollak said.

This is due to a variety of factors, labor economists say.

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Many companies have been scarred by their recent experience with retaining workers amid intense labor competition and have responded by “labor hoarding,” said Cory Stahle, an economist at Indeed.

Employers have shifted their policies more towards retention and away from recruitment, Pollak said.

The labor market has also gradually cooled down.

The US Federal Reserve has aggressively raised borrowing costs starting in 2022 to slow the economy and curb inflation, slowing the labor market. The central bank started cutting interest rates in September as inflation fell significantly and the labor market showed some warning signs.

While the labor market is strong overall, the labor market for workers is “diverging,” Stahle said.

Overall job growth is “robust,” but most of the job growth is in a handful of sectors such as healthcare, government and leisure and hospitality, Stahle said.

Meanwhile, job growth in white-collar sectors such as software development, marketing and media and communications has been “very, very slow,” he said. “Right now, your experience with the job market will depend on the type of work you do,” he said.

Economists could see a recovery if the Fed continues to cut rates, as employers may be more inclined to invest more in their businesses when borrowing costs are lower, economists said.

In the meantime, “things will be a little more competitive than they were a few years ago,” Stahle said.

Job seekers should be sure to tailor their resumes to the skills employers list on job postings, especially since many companies use “applicant tracking systems” to automatically screen applications, he said.

‘People who really want to leave [of their job] They may have to expand their search, expand their parameters and get a little uncomfortable and reskill,” Pollak said.

But those with jobs they really like “have unprecedented job security,” she said.