The no-hire, no-fire labor market
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Illustration: Natalie Peeples/Axios
It's a fine time to have a job — wages are rising and employers, for the most part, aren't laying people off. But it's a terrible time to look for one, with hiring rates the lowest in over a decade.
Why it matters: It's a job market that is frozen in place. Companies are hesitant to shrink or grow their payrolls for fear that they might be caught flatfooted if the economy revs up or unexpectedly slows down. And workers, seeing this tough hiring environment, are less likely to quit their jobs voluntarily.
- The labor market is in stasis, and the question now is how that eventually changes. Will hiring pick up the pace or will layoffs?
What they're saying: "Dissatisfied workers looking for a different job may need to hang tight with their current employer longer than they'd like," Elizabeth Renter, senior economist at NerdWallet, wrote in a recent note.
- "There are just fewer opportunities to go around, so those that are available garner stiff competition."
By the numbers: The hiring rate fell to 3.3% in August, the slowest pace since October 2013, according to the latest Job Openings and Labor Turnover Survey. That rate peaked at 4.6% in late 2021.
- Layoffs are holding at a low rate: 1% in August — lower than at any point before the pandemic.
- Workers are quitting their jobs at the slowest pace since 2015, if you strip out the plunge at the onset of the pandemic — a sign of low confidence in finding a new gig and a sign the post-pandemic Great Resignation of 2021 is very much over.
The big picture: In recent years, it has paid — literally — to switch jobs. Demand for workers was high and supply of them was low, so those changing jobs could demand (and were likely to get) higher pay.
- The job-switching premium is narrowing as the labor market loosens up and employers are less motivated to hire.
- Pay for job-changers was growing about 4 percentage points faster than those who stayed at their job before the pandemic, according to payroll processor ADP. At the height of the quits boom in 2022, the difference was as much as 8 percentage points.
- As of last month, the difference is just 1.9 percentage points.
The bottom line: The rapid job-to-job movement in recent years was unsustainable as companies were constantly training new workers. But the "stuck" labor market signals fewer opportunities for workers to advance and businesses to grow.
- "What this shows is a trend of less dynamism in the labor market," ADP chief economist Nela Richardson told reporters Wednesday.
