The U.S. labor market has hit a wall. Hiring dropped to 3.1% in February—the lowest rate since April 2020 when the economy was literally shut down—according to new data from the Bureau of Labor Statistics. But unlike 2020, today's stall is happening with the economy fully open and unemployment below 4%.
"This is a brutal job market," said Heather Long, chief economist at Navy Federal Credit Union, in an interview with Fortune. "To see that 3.1% hiring rate when the economy was closed down literally underscores how little hiring is going on."
The numbers paint a picture of a labor market stuck in neutral: 4.8 million hires in February, job openings down 358,000 to 6.9 million, and both the quit rate and layoff rate essentially flat at 1.9% and 1.1% respectively. Even retirements have fallen near record lows, as older workers cling to jobs amid economic uncertainty.
A Locked-Out Market
Nicole Bachaud from ZipRecruiter described it as a "locked-out market" for new workers. Companies aren't laying people off—but they're not hiring either. And with baby boomers delaying retirement, there's no natural turnover to create opportunities for younger workers trying to enter the labor force or change careers.
The stagnation is particularly striking in industries that traditionally absorb displaced workers. Long noted that hospitality and construction—"typically first stops for displaced workers"—showed unexpected deceleration, suggesting the problem runs deeper than any single sector.
Skanda Amarnath of Employ America pointed to another factor quietly draining labor market dynamism: . Tighter immigration enforcement has cut off a source of labor supply that historically helped fill gaps and maintain workforce flexibility.
