Low Hiring and Low Firing: What Does It Mean and How Can You Prepare

Federal Reserve Chair Jerome Powell recently commented that the labor market has stabilized, noting notably low rates of hiring and layoffs. He specifically stated, "We’ve had a low firing, low hiring situation, and it seems to be in balance now, for the last six, seven, eight months." (You can view the full transcript here). Understanding historically what follows this type of stabilization can help candidates and employers proactively prepare.

Typically, periods of stabilization characterized by low hiring and layoffs indicate a labor market in balance but poised for potential shifts. Historically, these phases often precede either increased hiring activity or a downturn leading to higher unemployment, based on broader economic conditions. Transitions from stabilization into the next labor market phase usually take between 6 to 12 months and are influenced by factors such as inflation, monetary policy adjustments, and industry-specific economic conditions.

Chair Powell highlighted several key indicators to watch, including rising initial unemployment claims suggesting increased layoffs, significant movements in job openings, adjustments in monetary policy especially related to interest rates, trends in productivity and wage growth, and changes in economic growth forecasts along with consumer and business sentiment.

The transition period following labor market stabilization typically unfolds over two to four quarters. The direction of this shift often depends significantly on broader economic trends, Federal Reserve policy decisions, and global economic conditions.

Preparation Tips for Candidates:

• Regularly check industry-specific job postings and hiring trends to identify sectors experiencing growth.

• Enroll in targeted training programs or certifications relevant to emerging market needs, particularly in fields projected to expand.

• Schedule consistent networking activities such as attending industry events, virtual meetups, or joining professional organizations to build strategic relationships.

• Prepare a clear, adaptable professional narrative that highlights transferable skills, allowing flexibility when applying to various industries or roles.

• Practice and refine negotiation skills by researching salary data and rehearsing discussions to confidently advocate for compensation and benefits.

Preparation Tips for Employers:

• Regularly analyze workforce data to identify critical skill gaps and forecast future talent needs, adjusting hiring strategies accordingly.

• Implement cross-training and skill development programs internally to enhance workforce agility and reduce dependency on external hires.

• Enhance employee retention by offering structured career progression paths, recognition programs, and competitive compensation packages.

• Accelerate recruiting efficiency by adopting technology tools and streamlining recruitment processes, enabling quicker and more effective talent acquisition.

• Regularly communicate with employees about company stability, market position, and future outlook to reinforce confidence and engagement.

Both candidates and employers can benefit from recognizing this balanced market state as an opportunity to collaboratively plan for the next phase. Clear communication, strategic alignment, and mutual preparedness will position both parties advantageously for whatever market conditions arise.

Chair Powell’s comments reinforce the importance of understanding economic signals and market indicators. Proactively preparing during this balanced yet transitional phase ensures that both employers and candidates can effectively navigate and leverage the next stage of the job market.