The saving grace is extremely low layoffs

Some companies are still hiring, but finding a job isn't as easy now as it was a few years ago.

The U.S. labor market seemed to be on upswing after a surge in new employment early this year - but a summer slowdown in hiring and fewer help-wanted ads suggest it won't get any easier to find a job.

The lethargy in the labor market is highly unusual by historical standards. The U.S. is adding the fewest new jobs on record during an economic expansion, but businesses are also loath to remove people from their payrolls.

The result: Hiring is low - and layoffs are even lower.

"It is a very still labor market," Nela Richardson, chief economist at payroll processor ADP, said in a TV interview this week.

Economists suspect the lethargy could last a while, too.

The economy experienced a brief upsurge in hiring in the first four months of 2026 before it petered out. Since May, the U.S. has added a paltry 60,000 jobs - and employment even fell in July.

Hiring probably didn't improve much in August, either. Economists predict the monthly employment report next Friday will show a mild 50,000 new jobs were created in the month.

Labor lament

Businesses have lots of reasons to keep a lid on hiring - first and foremost, to keep costs down.

The Trump administration's tariffs and the rise in oil prices (CL00) (BRN00) tied to the Iran war have raised the cost of doing business over the past 18 months. Labor is the biggest expense for most companies. It's also the easiest cost they can control.

All the economic uncertainty spawned by the White House's policies are another drag on hiring, analysts say. Companies can't plan as easily for the future and figure out how many people to hire when there are repeated disruptions in the domestic or global economies.

The rapid improvement in artificial intelligence has also become a potential labor-saving substitute. Companies are experimenting with AI more to see if they can use it to replace certain jobs, especially entry-level ones or those that don't require great skill.

"A lot of low-wage jobs are going to go away," said Gad Levanon, chief economist at the Burning Glass Institute, a labor research firm. He pointed out that clerical and office-support jobs have been declining for years due to new technology such as computers and the internet.

The influence of AI on the labor market, however, is still small for now.

A new survey by the job-search site Indeed found that 52% of labor-market economists thought AI would only be a "mild drag" on hiring over the next year. Another 35% actually thought it could boost employment.

Replacement hiring

Yet even if businesses aren't adding lots of new jobs, they aren't sitting still. Millions of workers leave or switch jobs every year - and those jobs need to be refilled.

"Businesses are replacing workers who leave, mostly driven by retirements," said Thomas Simons, chief U.S. economist at Jefferies.

The only industry that continues to add lots of new jobs is healthcare - demand for which only keeps growing. An aging population needs more doctors, nurses and aides to care for the elderly.

"The fastest-growing work is hands-on and beyond AI's reach," Indeed said in its quarterly labor-market survey.

Fortunately, most Americans they already have a job - and they are unlikely to lose it. The current unemployment rate, at 4.1%, is extremely low, and layoffs are near the lowest level since the 1960s.

"In general ... people who want to work, by and large, are holding or finding jobs," Federal Reserve Chairman Kevin Warsh said on Friday.

Take the number of people each week who apply for unemployment benefits: The number who sought benefits in mid-August fell to an extremely low 169,786. These are workers who recently lost their jobs. Except for a three-week period in 2022, new jobless claims haven't been that low since 1969, when the workforce was a lot smaller.

Not everyone is impressed by the low rate of new jobless claims, though.

"The reality is seniors are retiring and young people are struggling to get jobs. Those two groups don't get unemployment aid," said Heather Long, chief economist at Navy Federal Credit Union.

The number of long-term unemployed has also shrunk, however, to add to the evidence of stabilized labor market. It's fallen to 6.9 million people, from a four-year high of 7.8 million last November.

The reason for the decline is not clear. The economy only added a net 450,000 jobs in the same span.

An undetermined number of these people retired. An estimated 10,000 baby boomers retire every day, according to the U.S. Census Bureau.

Others may have left the country, either voluntarily or because they were deported by the Trump administration.

Finally, some people may have simply stopped looking for work because they couldn't find a job. They would no longer be considered unemployed under the government's definition.

Citibank economists, who are more negative about the labor market than other Wall Street firms, believe a lower unemployment rate stems mainly from more people leaving the labor market.

Help wanted?

Even more people could leave the labor market if jobs remain hard to find.

Job openings, as tracked by both the government and the private sector, rebounded early in the year and appeared to suggest companies might ramp up hiring. Yet job openings have since flatlined and remain stuck at low levels.

The Bureau of Labor Statistics, for instance, estimated job openings at 7.4 million in June. But that's 40% below the all-time high of 12.3 million in March 2022.

What's more, a closely followed employment tracker compiled by Indeed also shows a decline in job listings since the early spring. Earlier this month, Indeed also put out a new report saying it expects job openings to decline slightly until the middle of 2027. The unemployment rate could also inch up to 4.4% from the current 4.1%, it said.

-Jeffry Bartash