Americans are suddenly finding it harder to land a job — and keep it

Americans are suddenly finding it harder to land a job — and keep it, per CNN.

Many employers were hesitant to mandate a return to the office, fearing that workers might quit. If these employees did leave, they were likely to find another job that matched their preferences relatively quickly, often with higher pay. However, the situation is changing, with the once-booming labor market cooling down for job seekers.

In June, the unemployment rate reached a three-year high of 4.1%, with 6.8 million people unemployed, compared to 3.6% and 6 million unemployed a year earlier. The increase in unemployment, largely due to more people entering the workforce, indicates growing competition for job hunters. This shift is one of several signs that the labor market narrative is changing.

Luke Pardue, policy director at the Aspen Institute’s economic strategy group, told CNN, "We went from, ‘How is the job market defying gravity?’ to ‘Let’s hope it doesn’t hit the ground any faster.'"

Wage increases are also leveling off. Economists are closely monitoring the rate at which workers are quitting their jobs, as it indicates their willingness to explore new opportunities. The quits rate has remained steady at 2.2% for seven months, down from 3% during the pandemic. Job-switchers typically see significant pay raises, which can contribute to inflation. However, a recent Bank of America analysis shows that median pay raises are now just below 2019 levels. David Tinsley, senior economist at the Bank of America Institute, said, "People are still moving between jobs at a slightly faster rate than they were pre-pandemic... but the pay raises they’re getting when they make those moves is a degree softer." This suggests that the balance of power is shifting slightly back towards employers.

Unemployment durations are increasing as hiring slows down. The median duration of unemployment rose to 9.8 weeks in June, up from 8.9 weeks in May, reaching a level not seen since January 2023, according to the Bureau of Labor Statistics. This trend is supported by Labor Department data showing an increase in continuing claims for unemployment benefits, which rose to 1.858 million for the week ending June 22, the highest level since November 2021. Initial claims for unemployment benefits, a proxy for layoffs, have also been on the rise, with the four-week average reaching 238,500 by the end of June, the highest level since August 2023.

Despite the recent increase in unemployment duration and rate, it’s important to remember that the median unemployment duration is consistent with 2019 levels, and the jobless rate remains below historical averages.

Some industries are now laying off more workers than they are hiring. While there was a net gain of 206,000 jobs in June, not all sectors experienced growth. Retail and manufacturing, for instance, saw employment declines of 9,000 and 8,000 jobs, respectively. The biggest drop was in professional and business services, which includes fields like accounting and marketing. This sector saw a decrease of 17,000 jobs compared to May, driven largely by a reduction of 49,000 temporary help services workers. Temporary help is often seen as a leading economic indicator; companies typically hire temporary workers before committing to full-time hires, but these positions are also the first to be cut during economic downturns.

Since 2022, the temporary help sector has added jobs in only four months, with the June decline being the largest since April 2021. This sharp drop in temporary help may indicate potential challenges ahead for the labor market this summer, as noted by Jack McIntyre, portfolio manager at Brandywine Global, in a commentary released Friday.