A recent survey by the New York Federal Reserve paints a bleak picture of the U.S. labor market, highlighting rising anxiety among workers. The study, conducted in July, revealed falling employment rates, a surge in job seekers, and widespread dissatisfaction with wages and benefits.
The results add to growing concerns about the health of the U.S. economy. The unemployment rate, though historically low at 4.3%, has been steadily rising, fueling fears of a broader recession. Additionally, July’s nonfarm payrolls increase of just 114,000 was weaker than expected, further fueling anxiety.
The Fed survey results go even deeper, highlighting a significant shift in worker sentiment. Compared to March 2024, the percentage of individuals employed has fallen to its lowest level since 2014 (88%). In contrast, the number of respondents expecting unemployment has reached a record high (4.4%).
Job search activity has also picked up. The number of people looking for new positions in the past four weeks has skyrocketed to 28.4%, another all-time high. This surge suggests a potential mismatch between available jobs and workers’ skills or desired pay levels.
The survey also highlights growing dissatisfaction with pay. Satisfaction with current salaries fell more than 3 percent from last year, to a paltry 56.7 percent. Similar declines were seen in satisfaction with benefits (down 8 points) and promotion opportunities (down 9.3 points). These concerns were especially pronounced among women, those without a college degree, and low-income families.
As workers seek higher starting salaries (the reservation wage has risen to $81,147), reported job openings have fallen slightly to $68,905. This widening gap between expectations and reality is further contributing to worker frustration.
The Fed is closely monitoring these developments. With policymakers anticipating a rate cut in September, the upcoming jobs report in August will be crucial in determining the extent of the intervention needed to stabilize the labor market.
In conclusion, the Fed survey highlights a growing sense of unease in the U.S. workforce. Addressing workers’ anxieties and ensuring a healthy balance between job availability and compensation will be key to managing potential economic headwinds.
