It’s not uncommon to hear of friends and family struggling to find a new job. While the Fed reports that unemployment is at a healthy spot of 4.2%, many Americans are struggling to find new work. Why is that?
Why are Americans Struggling to Find Work?
According to the Labor Department, 1.89 million weekly unemployment insurance claims were made during the week of January 25th. The previous week, there were 1.86 million claims, one of the highest levels in the past three years. Essentially, this means that more and more American are unemployed and staying unemployed. Layoffs are quite common nowadays, and economists reason that the increased level of claims is evidence that Americans are struggling to find work and new jobs.
Oxford chief US economist Ryan Sweet claims that workers’ perception of the labor market depends mostly on their employment status. Sweet wrote, “conditions are challenging for those who are unemployed or not in the labor force but want a job.” ADP chief economist Nela Richardson concurs with this statement. Richardson said “It’s taking longer to find a job… when we isolate college degree holders in our ADP research, we’ve seen that it’s harder for college degree holders to find a job as well. So it’s harder compared to our recent experience in the Great Resignation in 2022… We’re entering a good but not fantastically fast hiring market.”
What does the Fed say about employment?
Fed Chair Jerome Powell stated that “it’s a low hiring environment… if you have a job, it’s all good. But if you have to find a job, the job finding rate, the hiring rates have come down.” This statement is upheld by the Job Openings and Labor Turnover Survey (JOLTS), where the hiring rate was flat at 3.4%. The job opening rates have decreased in the past few months, settling at a mere 4.5% in December. This low rate is now near its lowest level since the pandemic.
Powell, however, still claims the labor market is “broadly stable.” Other economists aren’t so sure, as slowing hiring rates mixed with concerns over Trump’s tariffs could lead to a questionable US economy. Trump is, however, trying to create more jobs for Americans. The US labor market added 170,000 jobs in January, down from 256,000 in December. Jay Bryson, Wells Fargo’s economics team lead, said “we suspect the January jobs report will continue to indicate the labor market has softened over the past year, but not to an alarming degree.
It seems that the main reason that Americans are struggling to find work is the lack of hiring and increased time for hiring. This mixed with other economic concerns raises quite a few eyebrows over the future of the labor market. What do you think will happen? Will the government be able to make enough jobs? Or will more and more people be out of work? Let us know in the comments.
Featured Image Credit: Ron Lach; Pexels: Thank You!
