Unusual Whales

The job market "is frozen in place"

Unusual Whales -

It's a great time to have a job — wages are rising, and most employers aren't laying people off. But it's a tough time to find a new one, with hiring at its lowest rate in over a decade.

Why it matters: The job market is stuck. Companies are reluctant to either shrink or expand their workforce, unsure of how the economy will unfold. Meanwhile, workers are hesitant to quit, recognizing the difficulty of finding new opportunities.

The labor market is in a state of limbo, and the key question is what will change first — will hiring accelerate or will layoffs begin?

What they're saying: "Workers unhappy with their jobs may have to stick it out longer than they'd like," wrote Elizabeth Renter, senior economist at NerdWallet. "There are fewer opportunities available, and the ones that do exist are fiercely competitive."

By the numbers:

  • The hiring rate dropped to 3.3% in August, the slowest since October 2013, according to the latest Job Openings and Labor Turnover Survey. In late 2021, it peaked at 4.6%.
  • Layoffs are holding steady at a low 1% — even lower than pre-pandemic levels.
  • Workers are quitting at the slowest rate since 2015, excluding the sharp drop during the pandemic's onset. This shows a lack of confidence in the job market and marks the end of the Great Resignation of 2021.

The big picture: In recent years, switching jobs was often financially rewarding. High demand for workers meant job-switchers could ask for — and receive — higher pay.

However, that "job-switching premium" has shrunk as the labor market cools.

  • Before the pandemic, pay for job-switchers grew about 4 percentage points faster than for those staying put, according to ADP.
  • During the peak of the 2022 quitting surge, that difference jumped to 8 percentage points.
  • As of last month, it's down to just 1.9 percentage points.

The bottom line: The rapid turnover of recent years was unsustainable, with companies constantly training new hires. But today's "stuck" labor market limits opportunities for workers to advance and hinders business growth.