Can't Find a Better Job? Here's Why the Labor Market Feels So Difficult Right Now
If you’ve applied for a job recently and found the entire process strangely frozen, you’re not imagining it and you’re not alone.
Even though the unemployment rate remains relatively low, employers of late have become much more cautious about adding workers. That caution has created a labor market where finding a new job can be difficult, even when mass layoffs and low job numbers aren’t dominating the headlines.
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Economists have a name for just such situations: “Slow hire, slow fire.”
Reuters recently used that phrase to describe a labor market in which companies are hesitant either to bring on new employees or to cut existing staff. It’s a distinction that helps explain why a job hunt can just feel so frustrating at the moment.
Employers Definitely Aren’t Hiring as Freely as They Once Did
The latest job market numbers add up to something of a mixed picture.
U.S. employers added 162,000 jobs in August, per Labor Department data culled by The Fiscal Times. That number was considerably stronger than what economists had expected, turning July’s initially-reported 23,000-job decline into a 21,000 job increase.
That August rebound, while heartening, doesn’t mean employers have begun aggressively hiring job-hunters. In fact, a number of economists have viewed the spike as simply a rebound from weaker months (rather than, say, the beginning of a major hiring acceleration). The result is a market where, yes, jobs are being created, but opportunities can be harder to find than the unemployment rate alone might suggest.
Why 'Slow Hire, Slow Fire' Matters Now
Typically, in a hot labor market, companies compete for workers by opening up positions and then hiring relatively quickly. In a downturn, layoffs may rise sharply.
A “slow hire, slow fire” environment sits somewhere in between those two extremes. Companies may keep their existing employees while putting off replacement hiring or new positions until they have more confidence in the economy. For workers, such a mindset can create a decidedly awkward situation. If you already have a job and want to move up, there may now be fewer openings to choose from. If you lose your job, there may now be fewer employers actively looking to replace you.
ABC News reported that employers across nearly every industry have now pulled back on hiring. Mark Hamrick, a senior economic analyst at Bankrate, said to ABC that new hiring has “slowed to a crawl.”
Don’t Trust the Unemployment Rate To Provide You an Accurate Picture
The current 4.1% unemployment rate can make the labor market seem healthier than it actually is, and likely feels to someone actually searching for work.
ABC reported that nearly two million job seekers have been unemployed for more than 27 weeks, representing roughly a quarter of all unemployed people. That same report cited a New York Federal Reserve survey showing that worker confidence in finding a new job had fallen to a record low.
Further complicating the situation is that the labor force itself has changed. Reuters reported that the pool of available workers has shrunk due to retirements and reduced immigration, meaning that the economy needs fewer new jobs each month to keep the unemployment rate relatively stable.
In short: A low unemployment rate doesn’t necessarily mean employers are eagerly competing for available workers.
The Bottom Line
Perhaps what makes the current labor market feel so strange (especially if you’re job hunting) is that it doesn’t fit neatly into the usual categories. It isn’t experiencing a broad hiring boom, but it’s also not heading toward a straightforward jobs collapse.
For folks trying to score a better job (or any job at all), the practical result is a market with fewer easy openings and more uncertainty regarding when companies will actually pull the trigger on hiring. Now, the August rebound suggests the situation can improve, but the broader “slow hire, slow fire” dynamic also explains why your job search may still feel so much tougher than a healthy 4.1% unemployment rate would lead you to expect.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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