For an increasing number of Americans, it's taking months to find a new job as labor market slows
The unemployment rate might be near a historic low, but it's taking longer for hundreds of thousands of out-of-work Americans to find new jobs, signaling cracks within a once-hot labor market as employers continue to cope with the impact of higher borrowing costs.
About 40% of the 7 million people who were out of work in October, or roughly 2.84 million people, have been looking for work for more than 15 weeks, an increase of 20% since a year earlier, according to data from the Bureau of Labor Statistics. More than half of those job seekers have been on the hunt for new employment for more than 27 weeks, or about half a year.
A drawn-out job search is increasingly common in the labor market today as companies hold off on hiring, especially in some industries such as tech and professional services, ZipRecruiter chief economist Julia Pollak told CBS MoneyWatch. It's a far cry from the heady years of 2021 and 2022, when Americans switched jobs at high rates in search of better pay and more fulfilling work, a trend termed "The Great Resignation."
The job market has since weakened under the strain of the Federal Reserve's restrictive monetary policy, with the central bank boosting borrowing rates to their highest point in 23 years to combat inflation, Pollak noted. While inflation has rapidly cooled in the past two years and the Fed began cutting rates in September, the burden of higher borrowing costs has caused consumers to pull back on buying cars and homes, impacting key sectors of the economy, Pollak said.
The job market today reflects "low hiring, low firing and low job-switching," Pollak noted. "It's this 'big stay'-type of situation — it's great if you have a job you like, and it's not great if you don't have a job."
Employers in October hired 12,000 workers, a jobs report that marked the slowest month for hiring since December 2020. As the anemic number reflects, businesses were weighed down by Hurricanes Milton and Helene as well as labor disputes such as the Boeing machinists strike.
Leading up to the November 5 election, a majority of American held a dim view of the strength of the U.S. economy, a factor partly credited with helping President-elect Donald Trump claim victory. While much of voters' anger was focused on inflation, the job market also played a role in their views, with the unemployment rate inching up from a pandemic low of 3.4%, and with some workers saying their pay hasn't yet caught up to inflation.
Since the election, though, voters' views of the economy have improved, especially among Trump supporters, CBS News polling has found.
November's jobs report
On Friday, the Labor Department will release the November jobs report, with economists forecasting 207,000 new hires last month, according to financial data firm FactSet. The jobless rate is expected to hold steady at 4.1%, near 50-year lows.
"The broader thread in the labor market has been a slow, gradual cooling, and the question is whether after accounting for these quirks if that will still be evident" in Friday's data, Pollack noted, referring to businesses recovering after the storms and the labor strikes.
Employers cut almost 60,000 jobs last month, an increase of 27% from a year earlier, according to outplacement firm Challenger, Gray & Christmas. The automotive and tech industries had the largest numbers of layoffs last month, the group said.
"The automotive industry is currently experiencing significant challenges, including potential tariffs affecting U.S. automakers with overseas factories, intensifying competition from Chinese electric vehicle (EV) manufacturers, and shifts in government subsidies for EVs," Andrew Challenger, senior vice president of Challenger, Gray & Christmas said in a statement.
The job market and interest rate cuts
The slowing labor market helped sway the Federal Reserve's decision to begin cutting rates in September, which marked the central bank's first rate cut in four years. The Fed followed with a second rate cut in November, and a majority of economists are forecasting another reduction at the central bank's December 18 meeting.
According to BNP Parabas analysts, the job market may be in a period of uncertainty partly due to the election.
"In September, an Atlanta Fed/Duke University survey found that 30% of businesses were paring investment plans due to uncertainty about the then-upcoming election," the analysts wrote in a recent research report, noting that they are predicting another rate cut this month.
They added, "Though we suspect that pre-election uncertainty played a role in restraining hiring of late, this report (due on 6 December) may be too early to reveal a clear unlocking of previously postponed hiring. Uncertainties about tariffs, immigration and fiscal policy remain."
Even so, some economists are paring their forecasts for the pace of the Fed's expected rate cuts in 2025, citing President-elect Trump's plans to impose tariffs, cut taxes and deport millions of illegal immigrants, which could, if enacted, reignite inflation.