The job market shouldn’t feel as broken as it does right now – and the data backs that up.
The U.S. economy grew by the fastest pace in nearly two years last quarter, the stock market is on a tear and unemployment is still relatively low. Usually, that should mean opportunity is everywhere: companies expanding, workers job-hopping and paychecks rising.
That’s not what’s happening.
A Bankrate analysis of Labor Department data finds the job market has split into two sharply different worlds — one for the employed, where the risk of losing a job remains historically low, and one for the unemployed, where job searches are dragging on, hiring has slowed to a crawl and the job market feels like it did in the aftermath of the Great Recession of 2007-2009.
This is a tale of two economies in many ways, and a similar divide exists in the job market.
— Mark Hamrick, Bankrate senior economic analyst
Here’s why the job market is worse than it looks on paper and how a booming economy is leaving many workers behind — in six charts.
The frozen job market
1. Hiring is low enough to make many jobseekers feel like they’re in a recession
Hiring is bound to cool when the job market slows, Bankrate’s analysis found. What’s unusual, though, is how sharply hiring has fallen compared to the uptick in unemployment.
Just 3.2% of workers were hired in August 2025, the latest month for which data is available, according to the Labor Department. A hiring rate that low tends to happen when the unemployment rate is 6.8%, Bankrate’s analysis found.
That’s a joblessness rate associated with economic downturns. Excluding the pandemic, unemployment was last that high in 2013, when the job market was still recovering from the Great Recession.
Currently, 4.3% of workers were unemployed as of August, the latest month for which data is available. That’s up from a half-century low of 3.4% almost two years ago, but it’s still below its historic average, Labor Department data shows.
To Heather Long, chief economist at Navy Federal Credit Union, the numbers suggest that the labor market is much weaker for job seekers than it is for job holders.
“For people who have a job, it’s not so bad, but if you lose your job or if you’re miserable and are trying to move to something better, it’s terrible,” says Heather Long, chief economist at Navy Federal Credit Union. “It feels more like a 7% unemployment rate situation.”
Workers are also remaining out of a job for longer than you’d expect. More than 1 in 4 unemployed workers (26%) have been out of a job for six months or longer, which historically resembles a job market with a 5.6% unemployment rate, according to Bankrate’s analysis.
That compares with a historically low layoff rate. Even as high-profile job cut announcements at major employers — from Amazon and Microsoft to UPS and Target — dominate headlines over the past few months, 1.1% of workers were laid off in August, according to Labor Department data. That’s lower than at any point before the pandemic.
Recent data from Challenger, Gray and Christmas showed that job cuts in October hit the highest for the month dating back to 2003. Even so, economists are hesitant to say the labor market is definitively shifting away from a “low-hire, no-fire” environment.
“Those layoff announcements definitely get a lot of attention, but it’s not the whole labor market,” says Allison Shrivastava, an economist with the Indeed Hiring Lab. “As far as whether or not we’re in a good place or bad place, we’re in a precarious place. We are balancing on one or two legs when we really should have four. If layoffs do increase, that’s when the stool kind of falls over.”
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2. Today’s unemployment rate may be misleading
The nation’s unemployment rate may also be making the economy look stronger than it really is, Bankrate’s analysis also found.
Unemployment is a measure of how many companies are hiring and how many people are looking for work. Right now, both have stalled.
“It’s almost as if labor supply and labor demand are coming down equally,” says Yelena Maleyev, senior economist at KPMG. “If labor demand dries up even faster with labor supply not growing, that’s when the unemployment rate could tick up.”
Bankrate’s analysis shows that if the labor force had kept expanding at the same pace as last year, the unemployment rate would be closer to 5%, not 4.3%.
Economists blame a mix of long-term and recent factors that have been steadily shrinking the pool of available workers, such as an aging population and stricter immigration.
More broadly, though, the numbers suggest that the economy now has less potential for growth — and fewer job opportunities. Maleyev estimates employers now need to create only about 30,000 jobs a month to prevent unemployment from rising further.
“In some economies, 30,000 payrolls is almost recessionary,” she says. “In an economy with a slowing labor supply, that would be considered a normal labor market.”
3. Employers should normally add more jobs when the economy grows this much
The U.S. economy grew 3.8% in the second quarter, the strongest pace in nearly two years, according to the latest data from the Department of Commerce. Historically, that should mean employers create about 264,000 jobs a month, Bankrate’s analysis found. Instead, employers barely created any: 22,000 positions in August and 88,000 over the past three months.
Economists are describing the current environment as a “jobless boom.” Companies are pouring money into intellectual property and productivity-enhancing tools like artificial intelligence — not into hiring more people.
“Economic growth has been fueled by AI investment and productivity gains, not the robust hiring seen coming out of the pandemic,” Hamrick says.
4. The slowdown means the nation’s most vulnerable are getting left behind even more
The job market slowdown isn’t affecting everyone equally. Some groups more vulnerable to economic downturns — younger workers and Black workers — have seen a sharper, more painful pullback.
Bankrate’s analysis found:
- Unemployment among 20- to 24-year-olds is nearly 1.5 percentage points higher than expected given today’s 4.3% national unemployment rate.
- Black workers are currently facing an unemployment rate that’s half a percentage point higher than expected, Bankrate’s analysis found.
By contrast, white and Hispanic workers are experiencing unemployment roughly in line with historic norms. So are almost all other age groups, with the exception of workers between 44-55, who are facing an unemployment rate that’s a percentage point higher than it should be when unemployment is at 4.3%.
Economists say these disparities follow a familiar pattern. Young people and Black workers are often the first to feel a slowdown. Younger workers tend to hold entry-level roles that are cut early, while Black Americans face a mix of systemic barriers, from discrimination and education disparities.
“It very much is the case that in traditional slowdowns, marginalized workers get hit first,” Maleyev says.
One group, however, is getting hit unusually hard: college graduates. Sure, their 3.3% unemployment rate is lower than the national unemployment rate, as well as the rate for those without a college degree. But history suggests it should be closer to 2.4% when joblessness is at its current levels.
Meanwhile, workers with less than a high school diploma still face the highest unemployment of any educational cohort. Their jobless rate (8.2%), however, is lower than expected (9%). At the same time, those with only a high school diploma are roughly where they’re expected to be based on historic trends.
Taken together, the data shows what’s at stake when the job market takes a turn. When hiring slows, the groups most exposed to layoffs and hiring freezes fall further behind.
“We have to look at the margins first to see if there’s warning signs for the economy,” Maleyev says. “That might not mean a recession, but it doesn’t mean steady growth for all.”
How to stand out in a tough job market
The U.S. economy has been breaking the rules of traditional economics for years now, economists say. Before today’s “jobless boom,” there was a rapid cooldown in inflation that didn’t result in higher unemployment, Maleyev remembers.
Indeed’s Shrivastava blames the lingering effects of the pandemic for all of the distortions that have followed.
“People really had a hard time getting workers, and they’re still pretty hesitant to let go of workers because of that,” she says. “I don’t know if we would be in as good of a position right now if 2022 wasn’t as good of a labor market.”
Uncertain times, though, make it harder than ever to prepare. Here are 3 tips for standing out in today’s lopsided, unusually difficult job market.
1. Leverage your network
Shrivastava’s best piece of advice for navigating today’s slower job market? Utilizing your network.
If you’re on the job hunt, reach out to former colleagues, mentors, alumni associations or professional groups to let them know you’re looking. Even if you’re not actively job hunting, your connections can help you learn about roles before they’re posted and stay visible within your industry.
“Networking is a priceless thing, and it’s going to become even more priceless in an AI-heavy economy,” Shrivastava says.
2. Know the market and stay adaptable
In a slower job market, the most flexible and resilient workers who continue proving their value and sharpening their skills will always stand out, Hamrick says.
Start by identifying your “you” factor — the combination of skills, experiences and personal attributes that set you apart from others. Think about times you’ve solved problems, led projects or added measurable value at work. Update your resume and cover letter to highlight those wins, and practice talking about them in interviews.
Keeping an eye on which companies are hiring and expanding can also help steer you to a job that feels more secure and sustainable.
“For job seekers, it’s about not just signaling, but possessing, adaptability,” Hamrick says.” Keep your skills sharp and build upon them, while potentially focusing on industries and roles within enterprises and organizations with sustainable or growing demand.”
3. Keep a close watch over your finances
A slower job market can mean longer searches and smaller raises. But financial stability gives you options, and options mean leverage.
Build an emergency fund that can cover at least six months of expenses, review your budget to cut unnecessary costs and redirect those savings into a high-yield savings account to earn more interest. Having even a small cushion of cash can help you stay patient and choose a job that’s right for you, rather than take one out of financial desperation.
“The time-tested fundamentals will still apply,” Hamricks says. “In uncertain times, such as those in which we live, possessing options and resources equates to power.”
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