It’s easier than ever to keep your job—but harder than ever to land one

“At that time,” he said, “I had so many recruiters approaching me — to the point where I had to turn them down.”

Arias recently found another job, but only after an unexpected ordeal.

“I thought it would take about three months, but it turned into a year and three months,” said Arias, 39.

As Arias and other job seekers can attest, the U.S. labor market, which has been so hot over the past few years, has begun to slow. Now the labor market is in an unusual position: Workers are mostly secure in their jobs, with layoffs at historically low rates. Yet the pace of hiring has slowed, and finding a job has become harder. On Friday, the government will report on whether hiring slowed sharply again in August after a much weaker-than-expected increase in July.

“If you have a job and you’re happy with it and want to keep it, things are pretty good right now,” said Nick Banker, director of North American economic research at employment lab Indeed. “But if you’re unemployed or you have a job and you want to move to a new job, things aren’t as rosy as they were two years ago.”

Since peaking in March 2022 as the economy raced out of the pandemic recession, the number of listed job openings has fallen by more than a third, according to the government. Latest monthly job vacancies and recruitment report.

Temporary-help firms have cut jobs in 26 of the past 28 months. That’s a telling sign: Economists generally view temporary jobs as a harbinger of where the labor market is headed because many employers hire temporary workers before committing to full-time employees.

in This week’s summary of local economic conditionsLast week, the Federal Reserve’s regional banks reported signs of a slowing labor market. Employment agencies reported that job gains have slowed “as firms approach hiring decisions with greater hesitation,” the New York Fed found. “Job candidates are staying in the market longer.”

The Federal Reserve Bank of Minneapolis said one staffing agency reported that “businesses are becoming more selective” about who they hire. The Federal Reserve Bank of Atlanta found that “only a handful” of businesses plan to ramp up hiring.

Job hopping, which was widespread two years ago, has slowed as workers gradually lose confidence in their ability to find better wages or working conditions elsewhere. Just 3.3 million Americans left their jobs in July, compared with a peak of 4.5 million in April 2022.

“People are staying put because they fear they won’t be able to find new jobs,” said Aaron Terrasas, chief economist at Glassdoor, a job site.

The Labor Department reported in its revised annual estimates of employment growth that the economy 818K fewer jobs added In the twelve months to March than previously expected.

On the one hand, it’s no surprise that the pace of hiring has now moderated. Job growth in 2021 and 2022, as the economy rebounded from the Covid-19 recession, was the most explosive on record. Workers gained leverage they had not had in decades. Companies rushed to hire quickly enough to keep up with soaring sales. Many employers were forced to raise wages and offer bonuses to retain employees.

It was inevitable—and even healthy, economists say, in the long run—that hiring would slow, thereby easing pressures on wage growth and inflation. Otherwise, the economy would overheat and the Fed would have to tighten credit so aggressively that it would cause a recession.

The post-pandemic jobs boom was a stark contrast to the slow recovery from the Great Recession of 2007-09. Back then, it took more than six years for the economy to regain the jobs it lost. By contrast, the staggering job losses caused by the pandemic in 2020—22 million jobs—were reversed in less than two and a half years.

However, the growing economy fueled inflation, prompting the Federal Reserve to raise interest rates 11 times in 2022 and 2023 in an attempt to cool the labor market and slow inflation. For a while, the economy and labor market seemed immune to higher borrowing costs. Consumers kept spending, businesses kept expanding, and the economy kept growing.

But eventually, persistently high interest rates are starting to take their toll. Several prominent companies, including tech giants like Spotify, announced layoffs last year in the face of rising interest rates. But outside the tech sector of the economy, and to a lesser extent finance, most U.S. companies haven’t cut jobs. The number of people filing for first-time unemployment benefits is only slightly above its pre-pandemic level.

However, the same companies that retain workers do not necessarily add more of them.

“Compared to a year or two ago, it’s become more difficult, especially for entry-level people,” said Terrasas of Glassdoor. “Because of the gradual labor leakage in the tech and finance sectors, and in the professional services sector over the past year and a half, there were a lot of highly skilled and experienced people in the labor market.

“They are finding new jobs, by all accounts. But they are also pushing more entry-level people down the queue… New graduates, people without much work experience, are feeling the effects of sudden competition from people who have two, five or 10 years of experience in the job market. When the big fish enter the market, the small fish are naturally squeezed out.”

Despite the highest interest rate pressures in decades, the economy remains in strong shape, as Growing at a healthy 3% per year April through June. Most Americans enjoy strong job security.

However, given the increasing difficulty of changing jobs, some job holders are afraid.

“The reality is that a lot of people, even when they have jobs, are feeling a lot of anxiety about the economy,” Terrasas said. “People are feeling a little bit more job insecurity, a lot more stress in the workplace than they have in a while.”

A survey conducted by the Federal Reserve Bank of New York in August found that Americans as a whole are more worried about losing their jobs now than at any time since 2014, when people were just beginning to feel the full effects of the recovery from the Great Recession of 2008-09.

Adding to the concern is that memories of the recent jobs boom are still fresh in people’s minds.

“The reference point for most people is still 2021, 2022, when the labor market was very strong, and what looks to us as economists like a normalization (of the labor market from unsustainable levels), I think for a lot of people looks like a loss of status,” Terrasas said.

Consider Abby Neff, who since graduating from Ohio University in May 2023, has struggled to find the “traditional writing job” she hoped to get in journalism.

“Finding a permanent job in journalism was very difficult,” she said.

Meanwhile, Neff, 23, joined the government’s AmeriCorps agency, which recruits Americans to do community service, in southeast Ohio. The job didn’t pay much, but it gave her the opportunity to write and learn about everything from forestry to sustainable agriculture to watershed management.

She hadn’t expected to have such difficulty finding a job in her field.

“I feel like I did all the right things in college,” Nev said regretfully.

She edited a college magazine and networked with business people. She got some interviews, but later learned that the job had been filled without her having contacted the employer.

“I will be ignored,” she said. “I feel like I have to go looking for employers to get a response to an application or job application.”

Arias, a software engineer, started looking for a job “the moment I got laid off” in June 2023. At first, he was indifferent. He took time off to care for his newborn daughter and cashed in his severance package from Spotify. But when the job search proved difficult, he “decided to really ramp up” earlier this year.

Arias started driving for a ride-hailing company, getting work from passengers. He then reached out to a company that had attended a computer programming boot camp, looking for contacts. Eventually, his efforts paid off and he landed a new job.

But the process proved more frustrating than he imagined. The employers he contacted disappeared without explanation.

“That’s the worst part of the experience,” Arias said. “You get a cover letter. You send your resume. And then it’s over. The communication ends there. Or you get an automated response. So you don’t know what happened, what you did wrong… It’s very frustrating and very stressful, because you don’t know what happened.”