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The Great Freeze: US Labor Market Faces Mass Layoffs and Hiring Cautiousness

Strategic Insights

— 1 min read

The US labor market is experiencing a "Great Freeze" due to mass layoffs, AI eliminating job opportunities, and a clampdown on immigration. This situation has led to a lack of job openings and job seekers having few options for career advancement. Despite a robust US economy, businesses are avoiding large layoffs and hiring cautiously due to threats like tariffs, keeping the labor market stagnant. Economists warn that this trend is unlikely to improve soon.

Key Takeaways:

  • The "Great Freeze" refers to a situation where firms are laying off workers more than they are hiring, resulting in a stagnant labor market.
  • The US labor market has experienced highs and lows, with current job vacancies and hiring seeing a decline. Despite the robust economy, businesses are avoiding large layoffs and hiring cautiously due to uncertainty and threats like tariffs.
  • Employee turnover has dropped significantly, from 177% in 2023 to barely 50% in 2025, according to ZipRecruiter's poll.
  • Many companies are holding onto their current employees due to economic volatility, often referred to as "job hugging," with 30% of employers stating that lower turnover was triggered by external economic factors in 2025.
  • Vacancies for entry-level employees are expected to increase, with 32% of businesses intending to hire more people for these positions than for any other level.
  • Firms are hesitant to take significant actions due to stable growth and consumer spending, with 63% of companies intending to hire more people in the upcoming year, especially for entry-level positions.
  • Companies that prioritize skills, invest in their employees, and adjust to new technology will have a competitive advantage in attracting top people as the market changes, according to Nicole Bachaud, a labor economist at ZipRecruiter.

Statistics:

  • Employee turnover has dropped from 177% in 2023 to barely 50% in 2025 (ZipRecruiter's poll).
  • 30% of employers stated that lower turnover was triggered by external economic factors in 2025.
  • Vacancies for entry-level employees are expected to increase, with 32% of businesses intending to hire more people for these positions than for any other level.
  • 63% of companies intend to hire more people in the upcoming year, especially for entry-level positions.

Sources:

  • Business Insider
  • Nicole Bachaud, labor economist at ZipRecruiter
  • Daniel Zhao, chief economist at Glassdoor
  • Jason Draho, UBS Global Wealth Management
  • Stephen Juneau, senior economist at Bank of America

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