There Is A Question Whether The US Job Market Still Strong

The US job market is currently holding a 3.5% unemployment rate. However, layoffs are still happening across the country. The Federal Reserve’s attempts to battle inflation by increasing the interest rates might cause businesses to downsize.

The high inflation rates, volatile stock market, dip in consumer sentiment, and rising interest rates are all key indicators that suggest the onset of a recession. Even the housing market has begun to feel the effects of this economy. With the last monthly jobs report, we could all see how the unemployment rates have decreased to a pre-pandemic low. But in reality, layoffs are springing up across the states.

Industries such as technology, mortgage, and housing have slowed significantly, most probably affected by the rising interest rates. Even big players like Wayfair, Apple, and Walmart are considering downsizing in response to the current economic situation in the US.

But when looking at the statistics, the number of available opportunities is also twice that of unemployed job seekers in the country. It was said that there’s an availability of 10.7 million jobs in June. Since 2022 started, we could observe 1.3 million - 1.4 million layoffs each month.

Even among all this data, there are still signs that the job market is cooling. More people than ever are filing for unemployment benefits this year. This difference between the practical scenario and the statistics might be because we are considering the labor market to extrapolate on the real situation of the working American. In reality, the labor market is one of the last indicators to show real stress.

Big businesses have the advantage of a buffer with their record profits pre-pandemic. They can afford to try out other cost-cutting methods before they attempt layoffs.

The interest hikes by the Fed also have an effect on the performance of the job market. With rising interest rates, it becomes difficult for everyone to borrow. This will greatly affect businesses that use credit financing to develop. With high debt-related costs, most of these businesses have no other option but to cut down staff.

This goes to show that higher interest rates will create bigger financial troubles for employers, who will in turn consider layoffs to stay afloat. This will be one of the biggest causes of rising unemployment rates.

In July, we observed a rise in the hiring rates of leisure & hospitality, professional & business services, and healthcare sectors.

Many workers lost their jobs during the pandemic, most of whom were women. It was found that between January and December of 2020, 2.1 million women left the labor force. Some of these workers are still struggling to join the workforce back due to various reasons. On the bright side, a new paper suggests that women between 25 – 44 years of age have almost returned to their participation levels before Covid.

If you are pondering about asking for a raise, you might stand a chance of getting a favorable reply in this situation. The bargaining power is still pretty much with workers. If your company is doing well financially and is in a stable position, you should consider asking for a raise. But if your employer has already started layoffs, you should hold back the thought.

The average working American had to spend 22 weeks in the job search before finding a new position in June. However, the time you may need to find a new job will differ according to your unique situation.

If you have doubt that your company may start layoffs, it is wise to prepare yourself. You could start communicating with your supervisor/manager about how you can add more value to the company in the future. It is also wise to start managing your personal finances before you receive a big blow.