Pessimism among job seekers is the worst in a decade

In the seven months since he was laid off from his position as a lead training specialist for TikTok, Ryan Marrero has applied to more than 150 jobs, which have netted him six recruiter calls and only four interviews. He’s recently started applying to customer service roles, even though it would be “a step backward” for his career.

Before this, the last time Marrero, 40, was on the job market was in 2021. It was tough going then, too, but “at least then I was getting recruiter calls,” he said. Now, the whole process feels “a lot less personal and a lot more mechanical.” Despite spending hours each day tailoring resumes and applications to get past artificial intelligence screening tools he knows many employers are using, Marrero estimates that he hears nothing back from 90% of the places to which he applies. All the ghosting, rejection, and living in limbo is taking a toll on his mental health.

“It doesn’t seem like anybody’s hiring new people.” Marrero said. “It’s almost like there’s nothing out there.”

Marrero’s struggles reflect the frustrating realities for those braving the most stagnant labor market the United States has seen in years. A rare and vexing blend of forces — low unemployment and job quits, slowly rising layoffs, and sluggish hiring — means there are fewer opportunities, resulting in some of the toughest job-hunting conditions since the 2008 financial crisis.

Fresh data released by the New York Federal Reserve this week underscores the hardship in the labor market: Job seekers are feeling the worst about their prospects since 2013, when its Center for Microeconomic Data first started studying the trend. Job-finding sentiment plummeted by 5.8 percentage points in a single month to 44.9% in its August survey of consumer expectations.

Allison Shrivastava, an economist with the job site Indeed, said those with jobs are sticking with them. “But if you’re trying to get a different job or enter the labor market for the first time, you’ve probably not been feeling great for a while now,” she said.

The labor market is “frozen, a deer in the headlights,” Shrivastava added. “Everything is just staying put.”

Job ads created in the past month, which economists see as a key gauge of current hiring intentions, suggest employers are still posting some positions. But they’re either filling or withdrawing them quickly, leaving fewer listings overall.

It’s striking given that the economy is only a few years removed from one of the hottest labor markets in recent history, Shrivastava noted. Unemployment, which rose to 4.3% in August, according to the Bureau of Labor Statistics, has just come up from historic lows and remains above what economists deem “full employment.”

“Companies may not be letting go of workers yet, but they’re not hiring either,” Shrivastava said. “There’s a lot of uncertainty — when that happens businesses can’t plan ahead, everything kind of just freezes up, and that’s really where we are.”

This period illustrates “just how important churn is to the labor market,” according to Shrivastava, because “you need people leaving their jobs and going to better jobs.”

A “very unusual” amalgam of factors is combining to create the perfect storm of stagnation, according to Lisa K. Simon, chief economist at Revelio Labs. Uncertainty around interest rates and tariff policy — compounded by the immigration crackdown and a dimming economic outlook — is making it challenging for businesses to plan.

Simon also noted that “some automation through new technologies … [is] allowing companies to do more with less and to hold on to existing employees as opposed to hiring more.” But it’s hard to pin down exactly how much of current conditions can be traced back to rising automation, she added.

Meanwhile, employee confidence in employers has sunk to its lowest level in a decade according to Revelio’s data, while job postings have declined to levels not seen since 2021, Simon noted.

“Today’s picture, with low churn across all margins, is closer to a labor market in ‘pause mode’ rather than one in free fall,” Simon said.

Younger workers and other trying to enter the labor force for the first time are “facing the steepest barriers, since entry-level openings are often the first to be cut back,” Simon said, adding that those workers are also more likely to be overrepresented in the job search pool.

“Economic uncertainty, difficult politics and policy shifts mean companies are less likely to hire quickly, if at all,” said Andrew Challenger, chief revenue officer at Challenger, Gray & Christmas, a firm that tracks workforce reductions.

It’s been a long time since the outlook was this tough for those searching for work, Challenger said, noting that “a lot of current data is harking back to the recovery period after the Great Recession.” The legacy of that financial crisis has been that companies often “tighten their belts through layoffs or other cost-saving measures well before their bottom lines are hit,” he added.

“Employers want to report financial strength to appease shareholders, as well as have a cash reserve to weather uncertainty,” Challenger said.

Layoffs are on the rise, with more than 800,000 job cuts announced by employers this year to date. That’s the highest January-to-August total since 2020, when pandemic-era downsizing pushed layoffs to record levels, according to Challenger’s estimates.

It’s unlikely that the picture will brighten soon, Challenger said, noting that the firm expects hiring will continue to stall and “we could in fact see more layoffs.”