Jenny Lustig’s experience reflects a significant shift in the job market landscape. As a recruiter, she witnessed a dramatic transformation from a period of scarcity in candidate availability to an overwhelming influx of job applicants. The stark contrast led her to forgo traditional job-seeking routes and instead venture into entrepreneurship.
The surge in job applications mirrors broader changes in the U.S. labor market. While headline numbers suggest robust employment figures and low unemployment rates, the reality is more nuanced. Job growth has been heavily concentrated in specific sectors such as government, healthcare, and hospitality, leaving other industries to grapple with slower hiring or even job losses.
This concentration of job gains has raised concerns among economists and highlighted the divergent experiences of workers across different industries. In sectors like healthcare and hospitality, employees may still enjoy opportunities for job mobility, salary increases, and relative job security. However, workers in other industries, particularly white-collar roles, are facing a different reality characterized by fewer job openings, sluggish hiring processes, and heightened fears of layoffs.
This discrepancy between the macroeconomic indicators of a strong economy and the lived experiences of workers underscores the complexity of the current job market. Despite efforts by the Biden administration to promote the nation’s economic well-being, many individuals remain apprehensive about their future prospects in the face of ongoing job cuts and uncertainties.
For Jenny Lustig and others navigating this evolving landscape, the prevailing sentiment is one of uncertainty and apprehension about what lies ahead in the job market. The shifting dynamics underscore the importance of adaptability and resilience in navigating career paths in today’s ever-changing economy.
Where is the economy adding jobs?
The steady job gains observed throughout 2023 have raised eyebrows among economists, prompting a closer examination of the underlying dynamics driving the labor market. While headline figures may suggest a robust economy, a deeper analysis reveals a more nuanced reality, according to James Knightley, chief international economist at Dutch bank ING.
Key industries such as healthcare and leisure and hospitality have played a significant role in fueling job growth, particularly as they seek to replenish staff levels depleted by the pandemic. However, Knightley warns that the current aggressive pace of hiring in these sectors may not be sustainable in the long term.
Moreover, despite the apparent strength in headline job numbers, there are indications that the quality and attractiveness of available jobs may not align with workers’ preferences. The rate of workers quitting their jobs has declined sharply, suggesting that many individuals are not finding the available employment opportunities appealing.
While the headline numbers may paint a picture of economic strength, Knightley emphasizes the importance of examining the composition of job gains to gain a more accurate understanding of the labor market’s health. The disparity between headline figures and underlying trends underscores the complexity of the current economic landscape and the need for a nuanced approach to interpreting labor market data.
Some sectors are still hiring fast
For employees in sectors experiencing continued growth, such as healthcare and hospitality, the labor market landscape has remained largely unchanged from the red-hot conditions observed two years ago.
Sara Hadlock, a certified nurse assistant based in Salem, Ore., recently transitioned from a full-time position at an assisted-living facility for deaf and blind individuals to working for Express Healthcare Professionals, a healthcare-staffing agency. In her new role, she engages in contract work, picking up shifts at various medical facilities in her area. This arrangement offers greater flexibility and higher pay compared to her previous full-time job, reflecting the persistent staff shortages in the healthcare sector.
While working at the assisted-living facility, Hadlock had a range of responsibilities and earned approximately $20 per hour. However, since joining Express Healthcare Professionals, she has seen her hourly wages surpass $30—an increase that left her pleasantly surprised.
Hadlock’s experience highlights a broader trend in industries like healthcare and hospitality, where employers are actively seeking to shore up staffing levels and attract workers by offering competitive compensation packages. In the hospitality sector, for example, hotels are projected to spend $123 billion on compensation this year, marking a 20% increase from pre-pandemic levels in 2019. Nonetheless, many hotel owners have had to scale back guest services or housekeeping operations due to ongoing staff shortages.
Despite the abundance of job opportunities in her industry, Hadlock acknowledges the lingering question: Where are the people? The mismatch between available jobs and the available workforce underscores the persistent challenges faced by employers in filling critical positions, despite their efforts to offer attractive incentives and benefits.
Are lots of workers getting laid off?
In contrast to the buoyant job market conditions experienced in certain sectors, a growing number of workers, particularly those in traditional office roles, are expressing heightened concerns about the prospect of job cuts.
According to Glassdoor’s employee confidence index, February saw a notable decline to its lowest level since the data collection began in 2016, with only 45.1% of employees expressing a positive outlook on the business environment for the next six months. This sentiment is reflected in the increasing mentions of job cuts in company reviews on the site, which have surged by 20% over the past year and more than doubled since 2022.
Daniel Zhao, lead economist at Glassdoor, notes that the overall job market has cooled compared to the previous year, leading many workers to prioritize job security and adopt a cautious approach to seeking new employment opportunities.
Consumer confidence data further underscores the growing pessimism regarding job prospects, with a notable drop in the percentage of survey respondents perceiving jobs as plentiful, from 52% last February to 41.3% this year.
Despite these concerns, actual layoffs across the economy have remained relatively low and are still below pre-pandemic levels as a percentage of the workforce. However, high-profile layoffs announced by companies like Nike, Snap, and Google have garnered significant attention, contributing to heightened anxieties among workers, even though they may not be indicative of broader labor market trends.
Zhao suggests that after experiencing a labor market characterized by robust hiring during the pandemic recovery, even a return to more typical conditions might be perceived negatively by workers. This phenomenon is particularly evident in the tech sector, where headcounts remain higher than pre-pandemic levels despite notable layoffs.
Despite the presence of data indicating overall market stability, Zhao emphasizes that individual perceptions of the job market may be influenced more by subjective factors than objective data. Ultimately, regardless of the statistical realities, individuals’ feelings about the job market are deeply personal and subjective.
Will unemployment rise soon?
The narrow scope of job growth in the previous year is just one aspect of the labor market that has economists concerned. The quit rate, an indicator of workers voluntarily leaving their jobs, fell below pre-pandemic levels in February, signaling a softer labor market. Additionally, individuals who lose their jobs are encountering longer periods of unemployment, with the number of continuing claims for unemployment benefits hovering just above pre-pandemic levels.
James Knightley, an economist at ING, highlighted a recent increase in part-time employment coupled with a decline in full-time employment, indicating a potentially precarious labor market situation. The unemployment rate also saw a slight uptick in February, reaching 3.9%, its highest level in over a year. This trend could potentially slow economic growth and weaken consumer spending, which has been buoyed by steady incomes.
Concerns about job losses are compounded by financial strains faced by many Americans, who have depleted savings and accumulated credit card debt. While some economists emphasize that overall labor market conditions remain stable, there is a perception gap among Americans, similar to other economic trends such as inflation.
Gregor Jarosch, an economist at Duke University, noted that while certain sectors may be experiencing losses, it doesn’t necessarily indicate widespread labor market deterioration. However, for individuals like Lustig, who has experienced job loss firsthand, the outlook remains bleak. She has transitioned away from the corporate world and launched a venture aimed at assisting others facing similar challenges, reflecting a broader sense that job losses have become a new norm in today’s economy.
Despite varying perceptions and interpretations of the labor market, the prevailing sentiment among some workers, like Lustig, is one of uncertainty and pessimism regarding future job prospects.