Americans are increasingly worried about losing their jobs, a new survey from the Federal Reserve Bank of New York released on Monday showed. This is a concerning sign at a time when economists and central bankers are closely monitoring the job market for cracks. The New York Fed’s July survey indicated that the expected likelihood of becoming unemployed rose to 4.4 percent on average, up from 3.9 percent a year earlier and the highest in data going back to 2014.
The new data showed signs of the labor market cracking across a range of metrics. People reported leaving or losing jobs, marked down their salary expectations, and increasingly thought that they would need to work past traditional retirement ages. The share of workers who reported searching for a job in the past four weeks jumped to 28.4 percent, the highest level since the data started, up from 19.4 percent in July 2023.
Survey quizzes a national representative in the labor market
This survey, which quizzes a nationally representative sample of people on their recent economic experience, suggested that meaningful fissures may be forming in the labor market. While it is just one report, it comes at a tense moment, as economists and central bankers are watching nervously for signs that the job market is taking a turn for the worse. The unemployment rate has been climbing over the past year, reaching 4.3 percent in July.
This escalation has put many economy watchers on edge, as the jobless rate rarely rises as sharply as it has recently outside of an economic recession. However, other data have not widely corroborated the slowdown in the labor market. Although jobless claims have seen some increase, they remain relatively low.
Consumer spending remains robust, with overall reports suggesting shoppers continue to open their wallets. Jerome H. Powell, the Fed chair, is preparing for a closely watched speech on Friday that will likely address these labor market concerns.
Feds will navigate these growing warning signs
All eyes will be on how the Federal Reserve will navigate these growing warning signs. Despite fears they may be jobless soon, today’s job seekers won’t accept less than $81,147, up by almost $20,000 since March 2020. This figure is the average reservation wage of workers, which is the lowest wage at which respondents would be willing to accept a new job.
The report highlights that workers are also increasingly dissatisfied with their current wages, benefits, and promotion opportunities. Women, people without a college degree, and those with annual household incomes lower than $60,000 feel the least likely to land a promotion any time soon. Despite the bleak job market, more people are looking for a new job now than during The Great Resignation.
Job fears on the rise
Nearly 30% of those surveyed said that they had been job hunting last month, up from 19% in July 2023. It marks the highest level recorded since March 2014, when 32% of professionals said they were looking for another job.
In comparison, in the Spring of 2021, when a record number of American workers quit their jobs, just over 20% of people surveyed were searching for new pastures. The rate of those transitioning to a new employer has hit the highest level ever at 7.1%. Again, fewer than 5% of people reported enrolling with a new company during The Great Resignation.
According to a new report from Bankrate, nearly half of Americans are planning to search for a new job in the next year, and Generation Z is likely to lead the wave of resignations. In the report released on Monday, 48 percent of Americans indicated they were likely to seek new employment within the next 12 months. The data showed Gen Z workers, those born between the mid-1990s and early 2010s, were particularly inclined to plan their resignation, with 39 percent saying they intended to quit their jobs this year.
That compares to just 25 percent of all workers. Meanwhile, only 29 percent of Millennials, 19 percent of Generation X, and 11 percent of Baby Boomers reported similar intentions. Mark Hamrick, Bankrate’s senior economic analyst, noted the job market’s current condition isn’t as robust as the one seen during the reopening of the economy a few years back.
“This is not the red-hot job market coinciding with the reopening of the economy a couple of years back,” Hamrick said in the report. “It is more in line with what we experienced before the pandemic.”
Higher interest rates always cool the job market
Hamrick added that the job market has cooled since the Federal Reserve increased its interest rates, notably affecting sectors related to the housing market. “If we see a pattern of Fed easing in the future, hopefully avoiding a recession in the near term, these sectors should see some reinvigoration, which translates to opportunities,” he said.
Many workers, roughly 43 percent of Bankrate’s respondents, also plan to ask for a raise within the following year. This trend was more prevalent among younger generations despite rising concerns about job security. Around three in ten workers said they were more worried about job security since the interest rate hikes began in March 2022, while 16 percent said they were less anxious.
Overall, 70 percent of workers expressed concern over job security. In July’s most recent jobs report, the unemployment rate increased to 4.3 percent, with employers adding just 114,000 jobs. Due to the challenging job outlook, Bankrate’s report suggests that while many Gen Z and other workers might express a desire to leave their jobs, fewer may follow through.
Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, noted, “Saying you’re going to leave your job is much easier than actually leaving it.
Beene added, “It’s easy to see the reasons many in Gen Z, along with other generations, are considering leaving their employer: a feeling of being overworked, underpaid given the inflated prices we’re seeing, and a desire for additional benefits, such as time off and work-from-home, that were standards during the pandemic but are quickly disappearing.”
While the job market was exceedingly favorable during the “Great Resignation” of 2022, conditions are shifting, and employees may not have as many opportunities to switch jobs easily. Beene advised that while employees shouldn’t stay in jobs they dislike, it’s increasingly important to have a strategic exit plan, as the era of effortless job-hopping may end.
