Underlying Concerns in Robust U.S. Job Market

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The American job market has recently displayed a paradoxical stability that draws attention, especially against the backdrop of stubbornly high inflation and interest ratesIn November, the unemployment rate dropped to a historic low of 4.2%, and employers reportedly added an average of 175,000 jobs per month from September to November, with an annual average of 180,000 jobs added in the first eleven months of 2024. This data paints a picture of an economic landscape brimming with opportunity, yet underlying this façade of growth are troubling signs of crisis.

Economists predict that the non-farm payroll report to be released will indicate an addition of 160,000 jobs in December, maintaining the 4.2% unemployment rateHowever, as promising as these figures may sound, they obscure the challenges lurking beneathAccording to the U.SBureau of Labor Statistics, approximately 4.5 million part-time workers are seeking full-time employment—up from 4 million a year prior

This trend signals a troubling increase in the number of people who, despite wanting full-time work, are forced into part-time roles due to reduced hours or the lack of available full-time positions.

The shift towards part-time employment can, in part, be attributed to the recent wave of return-to-office mandatesMany workers unable to find remote opportunities are compelled to settle for part-time positions, creating a situation where people work less than they want, as they await a more favorable job offer.

Monthly employment data can exhibit significant fluctuationsIn November, the number of involuntary part-time workers reached 4.5 million, exceeding pre-pandemic averages by over 200,000. From September to November, about 2.8% of American job seekers were part-time due to the inability to obtain full-time jobs, a slight rise from 2.7% in the same three-month period of 2019.

This isn’t the only indication of weakness in the U.S

job marketMonthly hiring rates are hovering around the lowest levels seen since 2016. Notably, over 23% of unemployed workers had been out of work for six months or longer, marking the highest percentage since March 2022. The average number of applicants per job posting on LinkedIn has surged from about 1.5 per position to 2.5 over the past year, signaling a competitive environment for job seekers.

But why has the job market become so challenging? According to economist Dante DeAntonio from Moody's Analytics, the workforce shortage experienced by companies post-pandemic led many to hike wages in an effort to attract talent, significantly raising labor costsFurthermore, the rush to hire an excessive number of employees from 2021 to 2023 has resulted in a current lack of additional hiring needs among employers.

Additionally, the Federal Reserve's aggressive interest rate hikes aimed at curbing inflation have imposed tremendous burdens on businesses

As interest rates surged, the cost of borrowing skyrocketed, putting intense pressure on company finances

At the same time, although the market shows signs of recovery, corporate sales have not rebounded robustly but have instead stabilized or grown at a snail's paceWith slow revenue growth in the face of high costs, companies are increasingly squeezed for profit, making it ever more difficult to sustain operations and navigate growth hurdles.

Nevertheless, the demand for consumption remains resilient, particularly as high-income households benefit significantly from rising stock and housing valuesThis ongoing consumer spending has meant that companies have not had to lay off many employees, allowing for a steady pace of net job growth each month.

Overall, the U.S

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