A Tough Job Market for Many
As the U.S. job market enters 2025, hiring rates remain below pre-pandemic levels, presenting significant challenges for job seekers across multiple sectors. Despite steady economic growth and low unemployment rates, companies have become increasingly cautious in their hiring strategies. Many professionals, from seasoned employees to recent graduates, are struggling to find opportunities that align with their skills and career aspirations.
Jodi Robinett, a 55-year-old IT sales professional from Kansas City, has been searching for a new job for over a year after being laid off in 2023. She has submitted over 500 applications and has encountered obstacles at every turn. “I’ve never seen anything like this,” she said. “I just want to work.” Her story is not unique—many job seekers are facing an unprecedented level of difficulty securing employment.
Certain job market metrics paint a conflicting picture. While layoffs remain low, hiring rates have stagnated at around 3.3%, a level not seen since the recovery from the Great Recession. Continued claims for unemployment benefits have risen, with more than 22% of unemployed Americans in December 2024 being out of work for at least six months—up from 20% the previous year.
The phenomenon known as the “Great Stay” has contributed to fewer job openings, as employees remain in their roles due to economic uncertainty and a lack of attractive new opportunities. “People are put in the position where they have to stay, even if they want to go somewhere else,” explained Guy Berger, director of economic research at the Burning Glass Institute. “But the people really, really hard hit are the people looking for a job.”
Small Businesses: Hope on the Horizon?
Despite these hiring challenges, small businesses may offer a silver lining. Many small business owners are expressing optimism, largely due to pro-business policies from the new administration. A survey from Vistage found that nearly two-thirds of small business CEOs expect to increase their workforce in 2025, with only 5% anticipating layoffs.
Lower inflation and reduced borrowing costs have contributed to this optimism. Expectations of looser regulatory compliance and labor laws have also made many small business leaders more confident about hiring. “We’re seeing an enthusiasm spike among CEOs, which may trigger hiring and growth through this year,” noted a Vistage report covered by HRDive.
However, concerns about shifting immigration policies and increased import tariffs pose risks. Some small business leaders worry that tougher immigration enforcement will limit their access to labor. “Nearly one in three CEOs are concerned about immigration policy changes negatively impacting their enterprises,” the report noted. Many businesses that rely on immigrant labor could struggle to find workers, potentially limiting their hiring plans despite their optimism.
Large Businesses: A More Cautious Approach
Larger corporations, on the other hand, appear to be taking a more cautious approach. Many have already stabilized their workforce post-pandemic and are hesitant to expand further. While layoffs are not widespread, hiring freezes and slow job postings remain common. “There are fewer jobs available, and they may or may not be in line with employees and what they’re looking for,” explained Jason Leverant, president of the staffing firm AtWork Group.
The impact of AI and automation is also playing a role, as companies evaluate how technology can streamline operations before committing to hiring new employees. “The rate of new technologies is rapidly accelerating. We can’t keep people up to date because the requirements keep changing,” said Gina Smith, an IDC research director.
Another factor influencing large businesses is the return-to-office debate. Many companies are reassessing their workforce needs as they balance hybrid work models with operational efficiency. While some businesses embrace remote work flexibility, others are reducing office space and consolidating teams, leading to fewer overall job openings.
The IT Sector: A Mixed Bag
Technology hiring presents a particularly complex picture. A recent survey of CIOs found that only 36% expect to increase IT headcount in 2025, the lowest percentage in over a decade. This decline is partly due to the growing role of generative AI, which is reshaping IT job demands. Companies are prioritizing AI-driven efficiencies, leading to a shift in hiring preferences toward AI specialists and away from traditional IT roles.
However, experts argue that while AI may eventually reduce hiring in certain IT fields, it will likely create demand in others. “We need to keep the people who understand LLMs, who are fluent in Python, and who can work with various models,” said Amy Loomis, an IDC research VP.
The debate over AI’s impact on hiring remains unsettled. While some believe AI-driven efficiencies will ultimately reduce IT hiring, others argue that increased demand for AI specialists will drive workforce expansion. “It will be a long way to go before we see reduced hiring,” said Jason Pyle, president of IT recruitment firm Harvey Nash. “It is going to take time to gain those efficiencies. We will see increased hiring over the coming years.”
Causes and Effects of the Hiring Slowdown
Several factors have contributed to the current hiring landscape:
- Post-Pandemic Workforce Stabilization: Many employees who switched jobs after the pandemic have settled into their roles, reducing turnover and job availability.
- Economic Uncertainty: Businesses are wary of potential economic slowdowns, regulatory changes, and global market volatility.
- Technological Advancements: AI and automation are reshaping job requirements, leading to shifts in hiring priorities.
- Immigration and Trade Policies: Changes in immigration laws and proposed import tariffs could impact labor availability and business costs.
The effects of this slowdown are far-reaching. Job seekers, especially recent graduates, are finding it harder to enter the workforce. Unemployment rates for recent college graduates are higher than for the general population—5.3% compared to 4%. “It’s definitely tough out here. I’ve never seen it like this,” said Maurissa Joseph, a 31-year-old HR professional with an MBA who has been job hunting for five months.
Many job seekers are accepting lower-paying jobs or roles outside their field of study. Additionally, companies are facing skill mismatches, as some positions remain unfilled due to a lack of qualified candidates willing to accept current pay levels. “If you pay the right price, you certainly have a better chance of attracting talent,” noted Pyle.
While hiring challenges persist, there are signs of potential improvement. As companies adapt to new economic realities, hiring may rebound in key industries. Health care, hospitality, and AI-related tech fields are expected to see continued job growth. Additionally, if inflation continues to stabilize and economic conditions improve, hiring sentiment could shift upward in the latter half of the year.
For job seekers, networking remains a crucial strategy. “They’re taking a lot more at-bats, but that involves more misses,” Berger said. Relying solely on job applications through online portals may not be enough in this competitive environment. Building professional connections, gaining in-demand skills, and staying adaptable will be key to navigating the evolving job market.
Ultimately, 2025 presents both challenges and opportunities for hiring in the U.S. While some sectors face headwinds, others are poised for growth. As businesses and workers adjust to these shifts, the long-term trajectory of the job market remains uncertain but hopeful.
FAM Editor: This is such a tough nut. Because of the bout of inflation, workers are requiring much larger salaries to maintain their current lifestyles. But companies want to maintain their profit margins, and can’t afford to raise the salaries for everyone, so they want to do more with less. AI and other advanced automation may replace new employees. IT hires may have the biggest adjustment to make.