Julia Pollak, chief economist at ZipRecruiter, says the labor market remains robust despite a gradual cooling that makes it more challenging for individuals to secure new employment.
Signs of Cooling Labor Market
On Tuesday, the US Bureau of Labor Statistics reported that national job openings in April dropped to their lowest level in over three years.
Job openings, which serve as a barometer of employer demand for labor, have decreased by 296,000 to approximately 8.1 million, the lowest level since February 2021, suggesting a potential softening in the job market. The ratio of job openings to unemployed workers in April also stood at about 1.2, down from a ratio of 2:1 observed approximately two years ago.
Jason Furman, an economics professor at Harvard University and former chair of the White House Council of Economic Advisers, noted on X that April's ratio has returned to its pre-pandemic level.
Daniel Zhao, the lead economist on Glassdoor's economic research team, also noted that the decrease in both quits and hires likely contributes to the perception of a sluggish job market, particularly for new or returning workers, which he suggested as an overall trend of modest cooling in labor data.
Signs of Labor Market's Strength
The job market eased from its red-hot levels in 2021 and 2022 when metrics such as job openings and turnover hit unprecedented levels. This period, often referred to as the Great Resignation, necessitated the US Federal Reserve increasing borrowing costs to slow down economic growth and stabilize the labor market to curb inflation.
Despite challenges, indicators suggest the US job market remains robust and resilient. Total job openings continue to surpass their pre-pandemic levels, while the layoff rate has remained predominantly at historical lows for over three years. The national unemployment rate has consistently been below 4%, indicating enduring strength in the labor market since February 2022. Workers' wages have also outpaced inflation, resulting in increased buying power over the past year. Furthermore, there are areas of strength in hiring, particularly in industry sectors that employ lower-wage workers.
Economists suggested that workers might feel disappointed with the current situation, influenced by their recent experience of a thriving job market. Pollak remarked that while 2021 may have been exceptional for job seekers, the current job market is more sustainable, and the gradual cooling of the job market could prompt the Federal Reserve to consider reducing borrowing costs for consumers in the near future.
A More Challenging Job Environment
Pollak advised job seekers to anticipate a somewhat more arduous job search experience, such as a 10% to 20% increase in applicants for many listings. Polak recommended that they apply to jobs regularly, present themselves in the best possible light, and remember that employers typically review resumes received within the first few days to one week.
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