The U.S. job market is experiencing a slowdown, according to economists.

• While the number of layoffs in the U.S. job market is decreasing, employers are still hesitant to hire at a fast pace.
• Historically low unemployment is a sign of labor market strength overall.
• While employers are retaining employees, job seekers are facing challenges.

Recently, the U.S. job market has been sluggish, which presents both positive and negative implications for American workers.

While businesses are retaining their current employees, job seekers may struggle to secure new employment opportunities as employers reduce their hiring, according to economists.

Bank of America economists stated in a research note on Friday that it is a "low-hiring, low-firing environment."

"Soft hiring and low layoffs are currently characterizing the labor market," they stated.

A Gallup poll published Tuesday revealed that about half of U.S. employees were seeking a new job as of Nov. 1, the highest share since 2015, and overall job satisfaction has dipped to a record low.

The 'great resignation' became the 'great stay'

By many metrics, the job market is strong for American workers.

The unemployment rate in November was 4.2%, close to the lowest levels recorded since the late 1940s. Additionally, the layoff rate in October was at its lowest since the early 2000s, and has remained relatively stable since then.

The hiring rate was at its lowest since 2013, and the average duration of unemployment increased to 23.7 weeks in November from 19.5 weeks in October.

Many workers are experiencing whiplash due to the current lack of dynamism in the job market, according to Julia Pollak, chief economist at ZipRecruiter.

In 2021 and 2022, workers left their jobs at an unprecedented rate as the U.S. economy emerged from its pandemic slumber. The number of job openings skyrocketed to unprecedented levels, and companies fought for workers by offering higher wages than ever before, enticing employees to switch jobs for better prospects.

The "great resignation" era has been replaced by the "great stay," according to Pollak.

This is due to a variety of factors, labor economists said.

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Cory Stahle, an economist at Indeed, stated that many businesses have been scared by their recent experience of holding onto workers amid fierce labor competition and have reacted by "labor hoarding."

Pollak stated that employers are now focusing more on retention policies rather than recruiting.

The labor market has also gradually cooled.

In 2022, the U.S. Federal Reserve increased borrowing costs to slow down the economy and control inflation, which negatively impacted the job market. However, in September, the central bank reduced interest rates as inflation decreased and the labor market showed some concerning signs.

A 'diverging' labor market

The job market is "diverging" for workers, according to Stahle.

Stahle stated that while overall job growth has been "strong," the majority of job gains are occurring in a limited number of industries, specifically health care, government, and leisure and hospitality.

The growth in white-collar jobs, such as software development, marketing, and media and communications, has been slow, according to him. Your experience with the labor market will depend on the type of job you have, he stated.

If the Fed continues to cut interest rates, hiring may bounce back as employers may be more inclined to invest more in their businesses due to lower borrowing costs, economists said.

"Competition is expected to increase compared to a few years ago, according to Stahle," said Stahle.

To increase their chances of getting hired, job seekers should ensure that their resumes match the skills mentioned in job postings, as many companies use "applicant tracking systems" to automatically screen applications, it was stated.

To successfully leave their job, individuals may need to broaden their search, adjust their criteria, and embrace discomfort while acquiring new skills, according to Pollak.

Those with jobs they really like have unprecedented job security, she said.