Why Americans' confidence in finding a new job is tanking even as the labor market is humming along

  • Americans are the most pessimistic they've been in years about their chances of finding a new job.

  • However, the unemployment rate remains low and the US economy continues to add jobs.

  • A slowing job market, particularly for remote and high-paying roles, could explain some of the pessimism.

Americans are getting increasingly pessimistic about their chances of finding a new job if they lose their current one.

In the New York Fed's Survey of Consumer Expectations, a nationally representative survey of roughly 1,300 US households, respondents are asked to estimate the chance that, if they lost their job today, they'd be able to find a new job they would accept in the next three months.

As of the recently released April data, the average probability was 50.9%, which means the respondents, on average, viewed their chances of success as effectively a coin flip. This was the lowest mark since April 2021. However, excluding 2020 and early 2021 numbers — when job-finding expectations plummeted due to the pandemic — it hasn't been this low since November 2014.

The NY Fed's survey data reveals a similar trend across education levels, incomes, and regions of the US: Americans are less confident in their ability to find a new job than they were in the years before the pandemic. The one group whose optimism is near record highs is workers aged 60 and older, whose average probability was 55.4% as of April. Older workers have a lower unemployment rate than the national average.

This pessimism about the job market is another example of the disconnect between how Americans say they feel about the economy and the hard economic data, which suggests things are going pretty well despite some evidence of a slowdown in the job market. However, some experts have argued that people have a legitimate reason to be sour on the economy, in part due to the impacts of inflation and high interest rates. Regardless, how Americans feel about economic issues could be a key factor in the presidential election this fall.

Why Americans might be getting worried about the job market

In some ways, Americans' growing pessimism in the job market is perplexing.

In November 2014, when the average job-finding probability among the NY Fed's respondents was 50.1% — similar to this past April's 50.9% figure — the unemployment rate was 5.8%. It was 3.9% as of this past April.

In November 2014, there were over 4.8 million job openings, per the Bureau of Labor Statistics. There were nearly 8.5 million openings as of the most recent March data.

What's more, the median number of weeks Americans remain unemployed is in line with pre-pandemic levels, based on the Bureau of Labor Statistics data. And despite a small increase from March to April in the number of unemployed people dropping out of the labor force, there hasn't been a notable uptick.

While Americans may be more pessimistic about the job market than some economic data suggests they should be, it's arguably less of a surprise that their confidence has trended a bit lower in recent months.

That's because the job market has become more challenging than it was a couple of years ago, when the Great Resignation was at its peak.

In May 2022, when Americans' average job-finding probability was 58.2% per the New York Fed survey, the highest it'd been in over two years, the US had around 11.5 million job openings, not far from the record figure reached two months prior. Compared to May 2022, there were about 3 million fewer openings as of March 2024.

Fewer job postings can lead to more competition among applicants. In a report published in May, LinkedIn stated a 14% increase in the number of applications per open role on its platform between November 2023 and March 2024.

Meanwhile, the unemployment rate — while still low compared to historical levels — has ticked up a bit.

In May 2022, it was 3.6%, below the 3.9% rate this past April and not far from the 3.4% reached twice in 2023. The US hasn't had an unemployment rate below 3.4% since the 1950s.

Not only has the unemployment rate risen slightly, but some Americans think they're at a higher risk of losing their jobs.

In addition to surveying people about their job-finding expectations, the NY Fed also asks them to estimate how likely they think they are to lose their jobs over the next 12 months. As of April, the average probability among respondents was 15.1%. While this was lower than the 15.7% in March, it was the second-highest probability since October 2020.

What's more, in May, the University of Michigan's consumer sentiment index, an oft-cited gauge of economic vibes, declined roughly 13% from April to its lowest level in about six months. In a statement accompanying the release, Surveys of Consumers Director Joanne Hsu said that consumers are expecting unemployment to move in an "unfavorable direction in the year ahead."

To be sure, while some experts expect the unemployment rate to rise over the next year, most are projecting only a modest increase.

Struggles to find remote jobs and high-wage roles could be fueling pessimism

The job market can be especially frustrating for Americans looking for remote work, since those roles can be difficult to land.

The share of US remote job postings on LinkedIn fell from over 20% in April 2022 to about 10% in December 2023. Despite the decline, LinkedIn said remote roles accounted for nearly half of all applications in December.

Additionally, no one is a good fit for each one of the US's 8.5 million job openings. So, it's possible that some Americans in certain industries are facing a job market where openings are far from abundant.

For example, there's some evidence that the job market for high-wage roles has cooled over the past year. In April, the industries that added the most jobs were generally lower-paying, including transportation and warehousing as well as retail trade.

Julia Pollak, the chief economist at ZipRecruiter, told Business Insider earlier this month after April's labor market figures were released by the Bureau of Labor Statistics that it is "no longer a white-hot labor market" or a job "candidate's market in every industry where workers can get whatever they want."

Lastly, it's possible that many Americans think the Bureau of Labor Statistics's job opening figures are overstated. For example, some job seekers have reported encountering "ghost jobs" — listings on job platforms that companies are no longer actively hiring for.

Fortunately for Americans, the strong recent labor force data suggests that the vast majority of people who want a job already have one.

But if layoffs begin to pick up, and more people find themselves looking for work, their job search might be more challenging than their last.

Are you struggling to find a job? Are you willing to share your story? If so, contact these reporters at jzinkula@businessinsider.com and mhoff@businessinsider.com.

Read the original article on Business Insider