The white-collar job market is hitting a wall. What does it mean for the economy?
A lively U.S. labor market in the past two years has been a rare bright spot in a fitful economic recovery from the pandemic, with robust job growth bringing the nation's unemployment rate close to a 50-year low. But with a possible recession looming, many companies are now slamming the brakes on hiring in the so-called knowledge sector.
Lyndal Cairns, a 41-year-old product marketer, left a her job at a startup in March in search of work at a more established company that would offer more growth opportunities. Since then, the Washington, D.C., resident estimates she's submitted 1,500 applications but has had only about 20 interviews for new positions.
"The conversion rate is abysmal — I would not put that on my CV in a marketing context," she joked.
"I am definitely finding it less effective than previous job searches," she said of her job hunt. "Feeling that I'm shouting into the void is the most difficult part. You just don't know — for every application, does the job exist, is the job still open, are you a good fit, is it a good wage, do they already have someone that they're interviewing? There's a lot you just can't see."
Across the U.S., it's worth noting, employers are still hiring. Payrolls rose by 230,000 in March, while the number of unemployed workers is near historic lows.
Yet there's been a marked slowdown in hiring for many white-collar jobs as businesses gird for a possible recession. Listings for technology roles are down 55% from a year ago, while banking industry vacancies are down more than 40% and insurance listings have fallen 18%, according to research from Indeed.
"Many businesses right now are just uncertain, either about the medium-term economic outlook, or they're concerned that their current employment levels are not aligned with where their business is headed," Nick Bunker, director of North American Research at the Indeed Hiring Lab, told CBS MoneyWatch.
That's leading companies to pull back on hiring, particularly in fields like marketing and human resources, he added.
In some ways, the situation is a reversal of the first year of the pandemic. Lower-wage service jobs, especially in leisure and hospitality, are still plentiful as Americans are going out and spending money. But hiring for professional and knowledge workers has slowed.
"At the 10,000-foot level, the job market is very strong," Bunker said. However, "Things are happening very differently in different labor neighborhoods."
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Pulling back
Several pockets of the corporate workforce are more affected by hiring slump, Bunker said. One is marketing, an area companies often trim when their business wobbles and they're looking to cut costs. Opportunities in corporate recruitment and human resources more broadly are also drying up.
"We're hearing from a lot of business executives that demand is much softer than it was a year ago," said Gregory Daco, chief economist at EY. "It's not just the tech sector — it's broadened out into finance, professional and business services, the information sector more broadly."
Another sign of this cooldown is that employees are putting in fewer hours. The typical workweek length, which surged during the pandemic, has fallen to pre-pandemic levels. If those hours fall any lower, Daco said, that would show employers are "trying to cut back on their workforce."
And while layoffs outside the tech sector remain at a historic low, the number of workers collecting unemployment has been steadily rising, indicating that it may be taking longer for those laid off to find work.
"The U.S. economy is losing speed, and the landing strip is short and narrow," Daco said in a research note.
"I just have to keep going"
That's not to say a recession is inevitable. The economy is still expanding, growing at a modest 1.1% annual rate in the first three months of the year, and none of the indicators that typically precede recessions — which include various measures of employment, spending and personal income — are flashing red, noted Apollo chief economist Torsten Slok. The construction and travel industries and higher-end consumer spending are holding up well, and there's a "manufacturing renaissance" unfurling after Congress dedicated billions to domestic industry, analysts at Vital Knowledge said in a research note.
"There's no doubt the U.S. economy is cooling," they wrote. "However, 'cooling' doesn't mean 'crashing.'"
Indeed, a cooldown without a crash would be the very definition of the "soft landing" the Federal Reserve has tried to achieve.
Still, worker confidence levels are far below where they were in the heady days of 2021 and 2022 as the economy was snapping back into shape.
One software engineer, who asked that his name be withheld to avoid possible retaliation from his employer, said he has applied to 60 jobs without a single response — a sharp contrast from his previous job-hunting experience during the pandemic, where "pretty much every place I applied, I got an interview and then I had a job within a month."
"It's very worrying — I thought I was in a safe industry," he said.
Indeed's research bears out this loss of confidence, Bunker said. In a recent survey, most people said they could easily find a job if they had to, but "those who were employed and have higher levels of education, they've become more pessimistic."
Cairns, the product marketer, chooses to remain optimistic.
"It was a gamble to leave when I did because I know what the job market is, but you have to be happy," she said. "This is not my first rodeo. I know how to get a job, and I know that one will come that is a good fit. I just have to keep going."