WSJ Your Money Briefing - Why Unemployed Office Workers Are Struggling to Find New Jobs

Episode Date: January 10, 2025

According to the Labor Department, it now takes someone six months on average to find a job – roughly a month longer than it did in early 2023. Wall Street Journal reporter Matt Grossman joins host J.R. Whalen to discuss why the labor market, especially for white collar workers, is weaker than it seems.  Sign up for the WSJ's free Markets A.M. newsletter.  Learn more about your ad choices. Visit megaphone.fm/adchoices

Get groceries delivered across the GTA from real Canadian Superstore with PC Express. Shop online for super prices and super savings. Try it today and get up to $75 in PC Optimum Points. Visit superstore.ca to get started. Here's your money briefing for Friday, January 10th. I'm JR Whalen for the Wall Street Journal. On average, it currently takes people about six months to find a job, roughly a month longer than it did during the post-pandemic hiring boom in 2023, according to the Labor Department.

Especially hit hard have been unemployed white-collar workers. Now we're at a point where the Fed has raised interest rates a lot to try to fight inflation. And so it's harder for companies to expand, which is what the Fed has been aiming for. And companies have filled a lot of the positions that they needed people for. So if you didn't get one of those musical chairs when you needed one, then it could be too late in some professions. We'll talk to Wall Street Journal reporter Matt Grossman about the outlook for 2025. After the break.

The nation's job picture may look rosy, but unemployed office workers are having a hard time finding work. Wall Street Journal reporter Matt Grossman joins me. Matt, the unemployment rate has been well below the average during the decade before the pandemic, but what is the complexion of the labor market below that top line number? The headline unemployment rate does not look so bad. But when you think about the experiences that people are actually having in the labor market, it can be a lot tougher than it might seem from that number. A couple of years ago, for every person who is looking for a job, there were two job openings

for them. Recently, that's fallen down to more like one job opening per person. And of course, that doesn't mean that everybody can just easily get a job because those jobs might not be in the same industries that the people have experience in who are looking for jobs. So, what that means is that relatively low headline unemployment rate can be hiding some of the challenges that people have, especially if they're out of work right now.

What's been causing the number of open jobs to shrink? After the pandemic, there was a big uptick in hiring for a couple of reasons. There were some industries, especially around technology and digital services when everyone was working from home that were really growing very quickly. And it was also a time when interest rates were very low, meaning that when companies wanted to expand and borrow money to do that, it was very cheap and accessible for them. Now we're at a point where the Fed has raised interest rates a lot to try to fight inflation. And so it's harder for companies to expand, which is what the Fed has been aiming for.

And companies have filled a lot of the positions that they needed people for. So if you didn't get one of those musical chairs when you needed one, then it could be too late in some professions. Why would the Fed try to get in the way of companies expanding? That seems counterintuitive in terms of economic expansion. Yeah, one of the Fed's goals is definitely to maximize the number of people who are employed, but obviously they're also really concerned about inflation. And if you have a situation like we did a couple years ago, where a lot of companies

are competing to hire the same workers, then that pushes up everybody's wages, which in turn can lead to a lot of inflation. So the Fed definitely wants as many people to have a job as they can, but at the same time when the labor market gets too tight, that's also a concern of theirs. Why are white collar workers in particular struggling to find full-time work? Yeah, so to understand that, I think it's helpful to think about the other half of the labor force, those blue-collar jobs. If you think about what some of those professions are, people who are waiters and waitresses, people who are in

nursing or other really hands-on types of work like that, there's always a need for people to fill those roles. As long as there are restaurants or people suffering from health conditions, those are very labor-intensive jobs that you're always going to need varying levels of skills and experience to help out in those workplaces. Also, something you can't do remotely, something you can't outsource to other countries. In the world of white-collar jobs, companies can try to be more flexible about jobs like that. And now there's a lot of new technology that can help them.

For example, if you think of a law firm that has in the past hired a lot of paralegals, if the economy seems to be slowing down, they might just try to get their current staff to do more work per person. They might try to get artificial intelligence to replace some of the work that people used to be doing. Companies, when they sense that the economy is slowing down, they try to do everything they can to keep their labor costs in check. It's a bit easier in a white collar kind of office job environment for managers to do that.

How long is it taking white collar workers and managers to find a job in the current market? On average, it's now taking workers in general across all types of jobs, an average of just under six months to find a new job. And there are some people who are finding jobs within two or three weeks of starting to look for a job and for others, it's probably taking them a year or more. So that average just gives you a sense of the general experience but it's definitely moving higher and obviously that causes a lot of pain and frustration for people who are looking for work. You spoke to some people who've been on the sidelines for a while. How are they getting by?

There are a lot of people who want full-time jobs who have had to settle for part-time work instead. Right now, the Labor Department says there are about four and a half million Americans who are in that situation. And there are obviously different public benefit programs that you can turn to. There's unemployment insurance. There's things like Medicaid and food stamps. So that's helpful to people in different situations.

But of course that's only gets you so far. It doesn't replace all of your income. There's usually some time limit on how long those unemployment benefits are going to help you. There's some help out there for people, but most of them obviously would rather be in the workforce. Are there any signs that this downward trend in white collar hiring could turn around?

2025 is going to be very interesting on that front. So the Federal Reserve, which had been completely focused on trying to curtail inflation for most of the last two years, now has started to pay more attention to getting the labor market into better shape or at least preventing it from getting any worse. And so they've started cutting interest rates last year. They've now cut interest rates by about a percentage point. And most economists expect they'll continue to be at least a couple more interest rate cuts this year.

Of course, that makes it a bit easier and less expensive to borrow money for companies that could encourage more companies to expand. But with inflation still above where the Fed wants it to be, the central bank really has to balance those two sides of the economy well, and they don't have unlimited scope to keep supporting the labor market. That's WSJ reporter Matt Grossman. And that's it for your money briefing. Tomorrow we'll have our weekly markets wrap up. What's news in markets? the labor market. Aisha Al-Muslim as our development producer. Scott Salloway and Chris Zinsley are our deputy editors. And Falana Patterson is The Wall Street Journal's head of news audio. Thanks for listening.