The June data follows several months of record job openings and attrition rates, which marked the height of the hot labor market as employers struggled to find workers amid shortages in many sectors. June figures continue to reflect a strong labor market.
“June was a pivotal month for the labor market,” said Julia Pollak, labor economist at ZipRecruiter. “There were interest rate hikes, the stock market entered a bear market, industrial production was negative, and consumer spending slowed. A lot of key recession indicators changed.”
The slowdown in the labor market is related to growing headwinds in the economy. Inflation has spiked to a 40-year high, which is hitting many businesses and households. In response, the Federal Reserve has raised interest rates four times this year, including for three-quarters of a percentage point in July.
The Fed is aiming to cut prices, but that work is also expected to cause the unemployment rate to rise from 3.6 percent to 4.1 percent. The Fed’s goal is to reduce the number of job openings and hiring without triggering a massive wave of job losses.
“What we’re seeing in June is going to get quite a bit worse in July,” Pollak said. “That is because [the Fed] it is throwing a lot of cold water on the economy in general and causing a lot of uncertainty.”
A registry number of Americans quit their jobs over the past year, in a phenomenon known as the Great Quit, as an active labor market fueled by the pandemic gave them leverage to find higher-paying opportunities, particularly in leisure and hospitality. But the data suggests that this era may be coming to an end. Although the rate at which workers leave their jobs remains high, Americans are no longer seeking other opportunities at the same rate.
“The churn is still very high historically, but it’s not accelerating,” said Kory Kantenga, senior economist at LinkedIn. “There’s a lot of uncertainty about whether there will be a recession and people don’t quit their jobs during recessions.”
The number of jobless claims also rose in June and job growth slowed, especially in the tech industry. Netflix, MasterClass, and Coinbase laid off hundreds of employees in June. Those layoffs accelerated in July, with Ford and 7-Eleven laying off 7,000 and 880 workers, respectively, and Meta and Apple announcing hiring freezes.
Stefan Hayden, a front-end software developer in New Jersey, received a termination email on July 20 from his job at cloud-based music platform Splice.
“I was personally taken by surprise. I don’t know if she was looking at the right indicators,” Hayden said. “But if other tech companies are having trouble raising money and making growth numbers, I can only imagine that Splice will too.”
Hayden said he hasn’t had a problem finding new job opportunities in software development. In fact, he said, he is overwhelmed by the number of job openings and the recruiters who contact him.
“The tech industry is still looking pretty good,” Hayden said. “Some small businesses are feeling the pressure, but many companies are still growing and hiring. I have a long list of places that are hiring and I am in a very good position. that seems to be [the case with] other developers and tech workers.”