Job market blues

News headlines these days are filled with anxiety-inducing claims about layoffs, particularly in tech. Polls suggest that workers feel the current job market is poor, with over 70% saying it’s a bad time to find a job, compared to only 30% in Q2 of 2022. Yet the unemployment rate of 4.3% is modest, and little changed from a year earlier. Payrolls grew robustly in March, after a decline in February and steady increase in January. While some IT roles have seen contraction, construction labor demand is expanding as companies spend record amounts on data centers. On the whole the market seems steady, so why the pessimism?

No compare, no despair

One issue is that the market was particularly robust in 2021-22, when the post-pandemic rebound, buoyed by low interest rates and trillions in money-printing, inflated revenues and drove speculative bubbles. IT companies in particular went on hiring sprees, which turned out to be wholly unjustified by economic reality. Starting in 2023, companies began retrenching as consumer behavior reverted to the mean.

The bad habit of expanding headcount unsustainably proved hard to break, however. After laying off 13% of its workforce in 2023, its “Year of Efficiency”, Meta found itself with a growing number of employees in 2024 and 2025. A new wave of cuts in 2026 should bring those numbers down, but only to around 2023 levels, if not higher. It’s a similar story with Amazon, whose federally reported employment data shows a corporate (non-warehouse) workforce that fell by 5% in 2023 but grew by 17% the year after. With such a strong basis of comparison, any slowdown is going to feel worse.

Tip of the iceberg

A headline number can belie many underlying dynamics. A market in which there’s a lot of churn–many people being laid off, but quickly finding another job–and one that’s stagnant, where companies aren’t letting people go but also not bringing people on, can produce the same overall unemployment rate.

The quit rate, which serves as a proxy for labor market confidence (more people are likely to quit if they’re confident about finding another job), is at its lowest since 2020. This suggests many people are staying put, even if they’re dissatisfied with their current position, due to difficulty finding a better opportunity. The job market, in other words, is exhibiting low liquidity.

Another sign of liquidity issues can be found in the growing share of workers out of the labor force for an extended period. While the total number of unemployed changed little over the year, the number of long-term unemployed grew by a fifth. A significant proportion of those who were jobless last year have had no luck altering their circumstances. This aspect of the job market seems under-reported, especially as long-term unemployment is known to reduce future earnings, which in return cuts Social Security benefits, etc., resulting in a lifetime of negative financial ramifications.

Some other structural differences exist between different employment groups. The unemployment rate of young workers (22-27) in Dec. 2025 was 7.8%, significantly higher than that of the overall population of 4.2%. Meanwhile, employment of the elderly is up: the number of workers 65 and above has grown by 117% over the past 20 years. This phenomenon is also found in other aging countries. In South Korea, the employment rate of those in their 60’s is higher than that of those in their 20’s. Such discrepancies tend to be more extreme in countries with weaker retirement programs, suggesting that older workers are being forced back into the workforce by financial pressures, which in turn squeezes younger job-seekers.

A low headline unemployment rate, in short, is no guarantee that the job market is desirable. An illiquid market heralds an economic freeze, where cautious employers refuse to invest in their workforce while dissatisfied employees do the minimum, resulting in slow productivity growth if not outright decline. This devolves into a vicious cycle of lower profits, job cuts, and shrinking demand, which will eventually throw the economy into recession.

Gini in a bottle

Another contributor to public dissatisfaction that unemployment numbers don’t capture is the perception that elites are doing quite well while ordinary people are suffering. The Gini coefficient, a measure of wealth inequality, is near record highs. The top 10% of earners account for half of consumer spending. Luxury hotels are thriving, while mid-tier ones are struggling.

What’s particularly galling is that job cuts are coming at a time when companies, particularly in IT, are reporting record profits. Breakneck data center spending paired with job cuts that explicitly cite AI as the reason make clear to workers that they’re being actively replaced. AI may be a scapegoat for poor management, but employees see that companies aren’t even giving them a chance to boost productivity before giving them the boot. It should be no surprise, then, that attitudes on AI have soured, particularly among the young.

The deeper grievance is that the gains being celebrated aren’t flowing to the people doing the work. The wealthiest 10% of Americans own over 90% of stocks; the bottom half holds barely 1%. When Meta’s stock rallies on news of layoffs, the celebration is concentrated among shareholders, while the people being shown the door are disproportionately those who weren’t compensated in equity. Asset appreciation, the dominant economic story of the past several decades, has done little for those whose only financial instrument is a paycheck. The Henry Fords of the world, who recognized that workers had to be able to afford the products they made, have been replaced by executives who view payroll as nothing more than a line item to minimize.

The young face a sharper version of the same trap. Without assets to ride the boom, they can only rely on wages to build wealth. Yet junior roles are precisely the ones being trimmed first, with 35% fewer openings in the last 18 months. Whether the automation theory holds up in practice or not, the consequence is the same: those locked out of capital markets are now being locked out of labor markets too.

Mind the gap

A 4.3% unemployment rate sounds like a healthy economy, the sort of figure that fits neatly into a press release. But headline numbers capture only what the system has chosen to count, and in the way it has chosen to count it. They miss those who’ve stopped looking, those who’ve taken any job available to keep paying rent, and the growing sense that opportunity is contracting even where the contraction hasn’t yet registered in the official tallies. Workers know what they are seeing, and no amount of statistical reassurance is going to convince them otherwise.

The lesson of the past several years is that headline numbers move slowly while public sentiment moves fast. By the time unemployment finally ticks up enough to alarm Wall Street, the political damage will already be done, just as it was when inflation prints came down months too late to save the previous administration. Economists who insist that workers are mistaken about their own circumstances tend to be the ones least exposed to those circumstances themselves. The job market may not yet be officially in trouble, but treating the gap between lived experience and the BLS dashboard as a problem of perception rather than measurement is the surest way to invite a much louder reckoning.