Is the Job Market Getting Worse? What We Know as the Government Shutdown Continues

The ongoing government shutdown, which is the longest in U.S. history, has stopped two important reports from the Labor Department.

These reports usually help policymakers and economists understand the current state of employment in the country.

Because the reports for September and October are delayed, the most recent official job data available is from August.
 

What Does the Latest Data Show?

 

• In August, the U.S. unemployment rate was 4.3%. Only 22,000 new jobs were added, showing that hiring was slowing down and growth in most major industries was minimal.
• Since official data is missing, private companies are trying to fill the gap. However, experts say their numbers aren’t as accurate or complete as the federal government’s reports.

 

Why Are Federal Reports Important?

Federal job reports use large surveys to gather reliable information about jobs, work hours, and wages from businesses and households across the U.S. Jerome Powell, the Chair of the Federal Reserve, has called these official reports the “gold standard.” Without them, it’s hard to know exactly how the job market is doing.

Powell recently said, “There’s just no story over the last four weeks. It’s kind of stable. So you don’t see anything that says that the job market is making a significant deterioration.”

Federal Reserve Governor Lisa Cook agreed that the longer the shutdown continues, the harder it will be to get good data, which makes forecasting the future even more difficult.
 

What Are Private Sources Saying?

 

• Private estimates show job postings are down and some payroll trackers report small or negative changes in job growth for October.
• The firm Challenger, Gray & Christmas said companies announced more job cuts in October than in any month since 2003, meaning businesses are being cautious about hiring.
• The Chicago Federal Reserve predicts that unemployment went up only a little in October, from 4.35% in September to 4.36%. This suggests the job market is mostly stable.

 

Shutdown Is Causing Confusion About Jobs

According to Indeed, a major job website, their labor index fell to its lowest level since February 2021—similar to before the COVID-19 pandemic.

Revelio Labs reported there were 9,100 fewer jobs in October, mostly due to government job losses, but health and education sectors saw small increases in employment.

Laura Ullrich from the Indeed Hiring Lab said that hiring was strong in 2021, 2022, and the beginning of 2023, but has steadily declined since then.

She added that the job situation is different depending on where you live: for example, Washington, D.C. has seen big government job cuts, while places like Lynchburg, Virginia are doing better than before the pandemic.

Ullrich said, “I don’t believe that the overall job market is in a negative spot,” but also admitted there are areas with clear weakness.
 

How Do Workers Feel?

Glassdoor’s employee sentiment index, which measures how workers feel about their jobs, dropped for the third straight month. Fewer people turned down job offers in October, showing confidence in the job market is going down.

Recent big layoffs from companies like Amazon and UPS have added to negative feelings about job security. In fact, U.S. companies announced 153,074 job cuts in October, the highest level since the early 2000s.

Payroll company ADP said there was a small increase in private sector jobs for October, but hiring was “modest” compared to earlier this year.

Governor Lisa Cook noted that while the unemployment rate has gone up a little, at 4.3% it’s still low compared to history. However, unemployment rose faster among young people and Black workers, showing inequalities are getting worse.
 

Summary

Because of the government shutdown, official job data is missing and private companies say the job market is still weak. Unemployment rates are still low overall, but some groups—like young workers and Black workers—are struggling more.

While most areas are not seeing a huge collapse, companies are cautious and layoffs have increased. The longer the shutdown lasts, the harder it will be to understand what’s really happening with jobs in the U.S.

-

Subscribe to our weekly newsletter for instant updates and articles straight to your inbox.