See This Is Why It’s So Hard to Find a Job Right Now: A ‘deep freeze’ has enveloped the U.S. labor market. A whole bunch of factors are at play by Justin Lahart of The WSJ. Excerpts:
"Uncertainty over tariff policy has made it difficult for many companies to plan ahead"
"For some—particularly small businesses—tariffs have raised costs, making it more difficult to take on new employees.
"High short-term interest rates are another pressure"
"Tech companies that hired heavily in the wake of the pandemic are still dealing with an overhang of workers."
"Workers aren’t leaving the jobs they have. The number of jobs people quit in December came to 3.2 million, the Labor Department reported Thursday, well below the 4.5 million hit in March 2022"
"The quits rate, which measures quits as a share of employment, was 2%, well short of the 2.3% it averaged in 2019"
"the overall number of hires employers made in December came to 5.3 million. That put the so-called hires rate—the number of hires employers made as a share of overall employment—at 3.3%. That is a very low number, not only below the level of a few years earlier, when businesses were desperate to bring new workers on, but also well below its level before Covid hit."
"the economy adding the fewest jobs last year, outside of a recession, since 2003"
"People don’t want to quit the jobs they have because the pace of hiring is low, but part of why the pace of hiring is low is that nobody is quitting their jobs."
"There simply aren’t as many people to hire [because of] "President Trump’s crackdown on immigration . . . Coupled with an aging country"
"There was a wave of tech layoff announcements in November 2022, as companies realized that the surge in business they experienced after the pandemic hit wasn’t going to persist. AI wasn’t in the mix."
"people’s employment prospects in jobs that are highly exposed to AI, such as software development, have been hurt"
The part about "People don’t want to quit the jobs they have because the pace of hiring is low, but part of why the pace of hiring is low is that nobody is quitting their jobs" reminded me of a concept sometimes found in principles of economics books called the fallacy of composition. Here is what I recall as one definition:
Fallacy of composition-The false belief that what is good for the individual is good for the group and vice-versa.
A typical example is when you stand up at a basketball game to get a better view. Yes, you will get a better view. But if everyone does that then no one's view actually improves. Or if you run to your bank to withdraw your money if you think the bank is about to go under you might get your money. But if everyone does that then very few people will get their money.
So with a slow labor market, an individual worker might say to himself "I will just stay right where I am since if I quit I will have a hard time finding a job." But if all workers think that then no one quits and there are no job openings. Then the labor market remains slow.
Related post:
Student-Loan Forgiveness Raises a Question About College (fallacy of composition) (2022) (This post talks about how it is a good decision for someone to get a college degree to get a better job. But if everyone goes to college we all can't get better jobs)
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