Looking for a job? New data suggest it may take a while
Job seekers are facing a tougher market. The U.S. hiring rate fell in February to 3.1%, the lowest since April 2020, and the number of job openings slipped to 6.9 million from a revised 7.2 million in January, according to a U.S. Department of Labor report released Tuesday.
The monthly Job Openings and Labor Turnover Survey, or JOLTS, tracks U.S. job openings, hires and separations, including resignations, layoffs and firings.
“This report shows that U.S. labor demand is still very weak,” Oliver Allen, senior U.S. economist at Pantheon Macroeconomics, told Straight Arrow News. “It’s not a disaster, but it’s not looking particularly healthy.”
Job openings were particularly sluggish in the accommodation and food services sectors, as well as in mining and logging. Hires fell broadly, but notably among small businesses.
Why the job market might be weaker than the headline numbers suggest
There could be more employment pain to come, economists said.
The new JOLTS data do not capture the full impact of the energy shock from the war in Iran that has sent gas prices to a nationwide average of $4 a gallon, Allen told SAN.
“Uncertainty about the war has picked up, which will only add to hiring freezes,” wrote Diane Swonk, chief economist of KPMG, in a note shared with SAN.
There is also a trifecta of economic headwinds, Allen said: “Inflation a little bit too hot, unemployment a little bit too high and job scope a little bit too weak all at the same time.”
Moreover, the nearly 7 million “job openings” cited by the Labor Department might not reflect reality, said Peter Morici, an economics professor at the Robert H. Smith School of Business at the University of Maryland.
“In today’s market, it’s almost free to post jobs,” Morici told SAN. “Just because there’s a job posted doesn’t mean anybody is getting hired.”
A ‘low fire, low hire’ economy
The U.S. is now in a “low fire, low hire” environment, economists told SAN.
“The Great Stay continues,” said Guy Berger, senior adviser on labor markets at Access/Macro. “It’s an incredibly tough time to find a job — as hard as it was in the early 2010s when we were digging our way out of the Great Recession.”
On the other hand, he told SAN, “People who already have jobs are unusually secure by historical standards – despite all the scary headlines about job cuts, layoffs are actually lower than they were a year ago.”
While unemployment is expected to stay close to 4.4% in March, those who have lost jobs will likely remain unemployed for a while longer, according to Swonk.
Is AI to blame for the hiring slowdown?
Key questions — and perhaps the elephant in the room — are whether rapid advances in generative artificial intelligence have contributed to the falling hiring rate and what will AI mean for the future of work.
This month, the Federal Reserve published a report that could tamp down these worries. “Despite the recent boom in AI investment across the economy and fears that the technology will lead to widespread job losses, we find no evidence of negative impacts thus far on firms’ job-posting behavior,” the report said.
But the authors also cautioned that some jobs are disproportionately impacted, and it is still too early to draw long-term conclusions.
The point remains hotly debated, with many fearing an AI jobs apocalypse.
“Young people out of college cannot find jobs,” Morici said. “The entry level positions are now being filled by computer programs.”
“Economists tend to view things in the present tense. They’re not very good at looking forward.”
Ella Rae Greene, Editor In Chief
