Analysis of the US Labor Market
Rick Hermanns, the President and CEO of HireQuest Inc., recently discussed the current state of the American workforce, highlighting areas of high demand.
Despite relatively low unemployment rates, the sluggish pace of job creation has led to a stagnation in the number of long-term unemployed individuals, which is concerning, especially given the ongoing economic uncertainties.
The Bureau of Labor Statistics (BLS) defines “long-term unemployed” as those who have been jobless for more than 27 weeks. In April, this group accounted for 23.5% of all unemployed individuals, marking the highest rate in three years. This comes as the economy continues to deal with the aftermath of the pandemic and faces its highest inflation levels in decades. By May, that percentage dipped to 20.4%, remaining above 20% since April 2024.
Alison Srivastava, an economist with Employment Lab, observed that while these monthly economic indicators can be quite pronounced, she noted that “long-term trends are moving upwards.”
Employment Growth Still Slow Amid Economic Concerns
Srivastava highlighted that various metrics, such as layoff rates and employee turnover, reveal a somewhat stagnant labor market. The low unemployment rate might suggest stability for those currently employed, but for job seekers trying to enter this market, the situation could be quite challenging. It appears that businesses aren’t exactly expanding their workforce, yet they’re not laying off employees either.
New Graduates Facing Tougher job Market
The current labor market climate is particularly tough for recent graduates. Historical data shows that during the Great Recession, the percentage of long-term unemployed reached above 45% in 2010 and 2011. After that, it gradually declined, hitting below 25% by 2016 and below 20% in 2019. However, the COVID-19 pandemic brought that rate back up, peaking at nearly 43% in 2021. It then dropped below 20% again by mid-2022, hitting a low of 17.6% in February 2023.
Federal Reserve Insights on Economic Stability
Liz Bentley, founder of a consulting firm, discussed the financial struggles faced by those who are long-term unemployed. Many of these individuals experience significant financial stress, losing out on potential income and savings for retirement due to prolonged joblessness. Bentley stressed that long-term unemployment affects people of various age groups, not just those at the beginning of their careers.
“It’s an issue affecting individuals in their 30s, 40s, and 50s who are still seeking long-term employment. The impact is widespread. It’s crucial for people to re-enter the job market promptly after layoffs or job changes,” she advised.
