The U.S. job market has experienced significant changes over the past year, especially as the Federal Reserve shifts its focus from inflation to employment. The number of job openings has dropped by 1.1 million since September 2023, with current vacancies hovering around 8 million. Federal Reserve Chairman Jerome Powell recently emphasized that the labor market is no longer a major source of inflation, signaling that further labor market cooling is not anticipated.
Hiring Trends and Employer Caution Despite a more stabilized job market, businesses are increasingly cautious in their hiring practices. Many companies, particularly small businesses, have put their staffing plans on hold, awaiting clearer economic conditions, such as the outcome of upcoming elections. Red Balloon’s Freedom Economy Index reveals that 70% of small businesses are neither hiring nor cutting staff. Hiring activity is at its lowest since 2012, according to Challenger Gray & Christmas Inc. Employers are concerned about economic uncertainty and are waiting for better indicators of stability before making staffing decisions.
Workers’ Fears and Job Security Employees are also increasingly concerned about job security. The number of people quitting their jobs has fallen by 300,000, reaching the lowest level since November 2020. A survey by the New York Federal Reserve shows that 15% of workers expect to lose their jobs within the next year, up from 12% in 2023. Additionally, fewer people believe they could quickly find a new job if they were laid off, and more individuals are actively seeking new employment opportunities, with 28.4% reporting job searches in the past four weeks—the highest rate since 2014. Concerns over job security are widespread, with a survey from AuthorityHacker indicating that 55% of full-time workers are worried about job loss. This growing anxiety has led to more employees searching for additional jobs or taking on multiple roles to secure their financial future.
Economic Strains: Multiple Jobs and Wage Struggles As economic conditions tighten, the number of people working two or more jobs is nearing a record high, with approximately 8.5 million workers holding multiple positions. These individuals, representing 5.3% of the employed population, are turning to additional work to combat rising living costs and stagnant wages. Inflation has stabilized somewhat, with the consumer price index (CPI) falling below 3% for the first time since 2021, but month-to-month price increases persist, particularly in essentials like food. For example, the cost of ground beef, eggs, and milk saw notable spikes in July.
Despite inflation cooling, wages have not kept pace. Since January 2021, the CPI has surged by over 20%, while real hourly compensation has decreased by 4%. Workers like Keith, a tech professional who juggles a full-time job with part-time work, are increasingly relying on side gigs to make ends meet as wages stagnate and inflation continues to outstrip pay raises.
The Fed’s Shift in Focus The Federal Reserve, after spending years battling inflation, has shifted its attention to employment as inflation pressures ease. Jerome Powell stated that inflation has significantly declined and that the labor market is no longer overheated. The Fed’s dual mandate requires a balance between price stability and maximum employment, and with inflation appearing under control, the focus has returned to ensuring robust employment levels.
Despite concerns over the rising unemployment rate, which has reached 4.3%, Powell pointed out that this increase is not due to layoffs but rather an increase in the supply of workers entering the market. In fact, layoffs have been slowing down, according to Challenger Gray & Christmas Inc. Job cuts have decreased by over 4% compared to the same time last year, with manufacturing sectors seeing the most significant reductions. Forecasts predict slightly higher unemployment in the coming years, with Morningstar’s chief economist, Preston Caldwell, projecting a 4.4% unemployment rate in 2025 and 4.5% in 2026. These figures align closely with the Fed’s own predictions of 4.2% and 4.1%, respectively.
Wage Growth and Future Job Market Outlook Wage growth is expected to slow in the coming year, with U.S. employers planning an average salary increase of 3.5% in 2025. This represents a slight reduction from the raises seen in 2024 but remains above the pre-pandemic average of 3%. The slowdown in wage growth reflects the easing of inflation and the stabilization of the labor market.
As the Federal Reserve gears up for potential interest rate cuts, it remains to be seen whether these measures will prevent further joblessness. Powell remains optimistic, noting that the cooling labor market and declining inflation suggest that the Fed’s restrictive policies have had the desired effect without causing significant harm to the job market. However, with unemployment expected to rise modestly in the coming years, the question remains whether the Fed’s actions will be sufficient to maintain stability in the labor market while keeping inflation in check.
Conclusion The U.S. job market is stabilizing after a period of significant post-pandemic disruption. While employers are cautious about hiring, and workers are concerned about job security, the Federal Reserve’s efforts to balance inflation and employment seem to be taking effect. As inflation cools, wage growth slows, and unemployment ticks upward, the Fed’s focus is now on ensuring a stable and sustainable job market for the future.
Source: The Epoch Times
Hiring Trends and Employer Caution Despite a more stabilized job market, businesses are increasingly cautious in their hiring practices. Many companies, particularly small businesses, have put their staffing plans on hold, awaiting clearer economic conditions, such as the outcome of upcoming elections. Red Balloon’s Freedom Economy Index reveals that 70% of small businesses are neither hiring nor cutting staff. Hiring activity is at its lowest since 2012, according to Challenger Gray & Christmas Inc. Employers are concerned about economic uncertainty and are waiting for better indicators of stability before making staffing decisions.
Workers’ Fears and Job Security Employees are also increasingly concerned about job security. The number of people quitting their jobs has fallen by 300,000, reaching the lowest level since November 2020. A survey by the New York Federal Reserve shows that 15% of workers expect to lose their jobs within the next year, up from 12% in 2023. Additionally, fewer people believe they could quickly find a new job if they were laid off, and more individuals are actively seeking new employment opportunities, with 28.4% reporting job searches in the past four weeks—the highest rate since 2014. Concerns over job security are widespread, with a survey from AuthorityHacker indicating that 55% of full-time workers are worried about job loss. This growing anxiety has led to more employees searching for additional jobs or taking on multiple roles to secure their financial future.
Economic Strains: Multiple Jobs and Wage Struggles As economic conditions tighten, the number of people working two or more jobs is nearing a record high, with approximately 8.5 million workers holding multiple positions. These individuals, representing 5.3% of the employed population, are turning to additional work to combat rising living costs and stagnant wages. Inflation has stabilized somewhat, with the consumer price index (CPI) falling below 3% for the first time since 2021, but month-to-month price increases persist, particularly in essentials like food. For example, the cost of ground beef, eggs, and milk saw notable spikes in July.
Despite inflation cooling, wages have not kept pace. Since January 2021, the CPI has surged by over 20%, while real hourly compensation has decreased by 4%. Workers like Keith, a tech professional who juggles a full-time job with part-time work, are increasingly relying on side gigs to make ends meet as wages stagnate and inflation continues to outstrip pay raises.
The Fed’s Shift in Focus The Federal Reserve, after spending years battling inflation, has shifted its attention to employment as inflation pressures ease. Jerome Powell stated that inflation has significantly declined and that the labor market is no longer overheated. The Fed’s dual mandate requires a balance between price stability and maximum employment, and with inflation appearing under control, the focus has returned to ensuring robust employment levels.
Despite concerns over the rising unemployment rate, which has reached 4.3%, Powell pointed out that this increase is not due to layoffs but rather an increase in the supply of workers entering the market. In fact, layoffs have been slowing down, according to Challenger Gray & Christmas Inc. Job cuts have decreased by over 4% compared to the same time last year, with manufacturing sectors seeing the most significant reductions. Forecasts predict slightly higher unemployment in the coming years, with Morningstar’s chief economist, Preston Caldwell, projecting a 4.4% unemployment rate in 2025 and 4.5% in 2026. These figures align closely with the Fed’s own predictions of 4.2% and 4.1%, respectively.
Wage Growth and Future Job Market Outlook Wage growth is expected to slow in the coming year, with U.S. employers planning an average salary increase of 3.5% in 2025. This represents a slight reduction from the raises seen in 2024 but remains above the pre-pandemic average of 3%. The slowdown in wage growth reflects the easing of inflation and the stabilization of the labor market.
As the Federal Reserve gears up for potential interest rate cuts, it remains to be seen whether these measures will prevent further joblessness. Powell remains optimistic, noting that the cooling labor market and declining inflation suggest that the Fed’s restrictive policies have had the desired effect without causing significant harm to the job market. However, with unemployment expected to rise modestly in the coming years, the question remains whether the Fed’s actions will be sufficient to maintain stability in the labor market while keeping inflation in check.
Conclusion The U.S. job market is stabilizing after a period of significant post-pandemic disruption. While employers are cautious about hiring, and workers are concerned about job security, the Federal Reserve’s efforts to balance inflation and employment seem to be taking effect. As inflation cools, wage growth slows, and unemployment ticks upward, the Fed’s focus is now on ensuring a stable and sustainable job market for the future.
Source: The Epoch Times
