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A gradual cooling of the labor market has made it tougher to find a new job, but overall conditions are still favorable for job seekers.
“Things have gotten competitive,” said Julia Pollak, chief economist at ZipRecruiter.
“Don’t get discouraged; there are opportunities out there,” she added. “This is still a strong labor market.”
Signs of a cooling labor market
National job openings in April fell to their lowest level in more than three years, the U.S. Bureau of Labor Statistics reported Tuesday.
Job openings are a barometer of employer demand for labor. They declined by 296,000 during the month to about 8.1 million, the least since February 2021, signaling a potential weakening in the job market.
Meanwhile, there were about 1.2 job openings per unemployed worker in April, down from a ratio of 2:1 about two years ago.
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April’s ratio is back to its pre-pandemic level, Jason Furman, an economics professor at Harvard University and former chair of the White House Council of Economic Advisers, wrote on X.
The hiring rate has also gradually fallen to below its pre-pandemic level, as has the quits rate, a gauge of workers’ sentiment about their job prospects, according to BLS data. Both were unchanged in April, though.
“The reduction in quits [and] hires alike likely explains why some feel the job market is sluggish [and] especially tough for new/returning workers,” Daniel Zhao, lead economist on Glassdoor’s economic research team, wrote on X.
Overall, labor data points to a “trajectory of modest cooling,” Zhao said.
But there’s strength, too
The job market has slackened from red-hot levels in 2021 and 2022, when metrics like job openings and turnover hit unprecedented heights, a period that came to be known as the “great resignation.”
The U.S. Federal Reserve raised borrowing costs to pump the brakes on the economy and labor market, ultimately to throttle back inflation.
Labor data on Tuesday “provided further evidence of normalization” toward a pre-pandemic baseline, Thomas Ryan, a North America economist at Capital Economics, wrote in a research note.
The labor market that directly preceded the Covid-19 pandemic is generally lauded by economists as a historically strong one for workers, characterized by low unemployment, solid wage growth and one of relatively good job opportunities.
There are indicators the U.S. job market remains strong and resilient despite headwinds, economists said.
For one, total job openings still exceed their pre-pandemic peak. The layoff rate has largely hovered at historical lows for more than three years. The national unemployment rate has been below 4% — a level indicating historical labor market strength — since February 2022. Workers’ pay raises have beaten inflation — meaning their buying power has increased — for the past year. And there are pockets of strength in hiring, as in industry sectors that employ lower-wage workers, for example.
Workers may feel disappointed by the current state of affairs due to their recent memory of a gangbusters job market, however, economists said.
“2021 may have felt fantastic for jobseekers, but it’s not the way things worked before and it’s not the way things will be forever,” said Pollak of ZipRecruiter.
The current job market is more sustainable, she said. A gradual cooling may also help influence the Federal Reserve to soon start lowering borrowing costs for consumers.
Be prepared for more competition
Job seekers should be prepared for a somewhat more challenging experience, such as a 10% to 20% increase in applicants for many job listings, Pollak said.
They should be sure to apply to jobs on a frequent basis, put their “best foot forward” and keep in mind that employers generally only look at resumes they receive within the first few days to one week, she said.
“You may not be wined and dined [by employers] quite the same way,” she added. “You may need to search a little harder and longer, but there are good matches being formed in this labor market, and they’re pretty stable.”