America's Low-Hire, Low-Fire Job Market Turns Three

Three years ago, the American job market settled into a pattern that few economists had planned for and fewer expected to last. Companies slowed their hiring, but they also stopped cutting staff in large numbers. The result looks stable from a distance, yet it has quietly locked many workers in place.

That combination is why the phrase "low-hire, low-fire" has stuck. For most of the modern era, the U.S. economy has behaved like a steady job-creating machine, with hiring surges that pulled new workers in after downturns and enough churn to let people change employers. That churn has slowed. Firms are reluctant to add headcount while demand is uncertain and borrowing costs remain high. They are also wary of cutting, partly because many still remember how hard it was to rehire during the labor shortages of the early 2020s, and they would rather hold onto the people they have.

For workers, the trade-off is uneven. Anyone with a job may feel secure, since layoffs have stayed low by historical standards. Job seekers, especially those new to the workforce or moving into a different field, often face longer searches and fewer openings. Pay gains for people who switch employers, which were a major driver of wage growth when the market was tight, have cooled as those opportunities become scarcer.

The broader concern is resilience. A labor market that creates few new jobs can still post a respectable headline unemployment rate, but it has less cushion if the economy weakens. Economists tend to watch the hiring rate, the quits rate and the layoffs rate together, because a drop in hiring often comes first and layoffs can follow. If the next slowdown brings job cuts, a market with few hires has fewer places for displaced workers to land quickly.

Whether this is a temporary pause or a new normal will depend on how businesses respond to interest rates, technology adoption and consumer demand over the coming years. For now, the old rules of thumb about the U.S. job market are less reliable, and both employers and job seekers are planning around a market that moves more slowly than it used to.