U.S. Workers' Job Confidence Hits All-Time Low, 44.9% Chance of Finding New Employment

According to a recent survey conducted by the New York Federal Reserve, workers' confidence in finding new jobs has reached an all-time low. This finding is indicative of broader issues within the U.S. labor market. The survey, part of the August monthly Consumer Expectations Survey, revealed that respondents believe there is only a 44.9% chance of finding another job if they lose their current one. This figure represents a significant drop of 5.8 percentage points from the previous month and is the lowest recorded since the survey began in June 2013.

This result underscores a reversal of the "Great Resignation" phenomenon that occurred between 2021 and 2022, during which approximately 4.5 million people resigned each month and were optimistic about finding new employment. However, the latest data from the U.S. Bureau of Labor Statistics shows that this number has plummeted to 3.2 million in July, marking a decline of over 5% compared to the same period in 2024.

Several factors that contributed to high labor mobility during the COVID-19 pandemic, such as mismatches between labor supply and demand and the availability of multiple job openings for each worker, have now waned. The labor market, which was previously dynamic, has stagnated. While there are few signs of widespread layoffs by employers, hiring has significantly slowed down. The reluctance of employers to increase wages due to inflation and economic uncertainty has led workers to remain in their current positions.

Currently, the number of available workers exceeds the number of job openings, a situation that has not been seen since before the pandemic. Other parts of the Federal Reserve survey also reflect this trend. The likelihood of voluntary job separation in the next year has barely changed, decreasing by only 0.1 percentage points to 18.9%. Concurrently, expectations of a higher unemployment rate a year from now have risen to 39.1%, an increase of 1.7 percentage points from July and 1 percentage point above the 12-month average.

Earlier in August, the non-farm payroll data was disappointing. The U.S. Bureau of Labor Statistics reported that only 22,000 new jobs were added, far below the expected 75,000. Additionally, the June data was revised down to 13,000, marking the first monthly decline since December 2020. The unemployment rate rose to 4.3%, and the broader measure, which includes discouraged workers and those working part-time for economic reasons, increased to 8.1%, both reaching their highest levels since October 2021.

Market analysts widely anticipate that the Federal Reserve will respond to the weakening labor market by lowering interest rates at its September 17 meeting, marking the first rate cut since December 2024. This decision is expected to provide some relief to the labor market and encourage job seekers, who are currently facing unprecedented challenges in finding new employment opportunities.