Start with JOLTS, the Job Openings and Labor Turnover Survey, which, as official government data, holds more water with economists than the private ADP data. Job openings fell to about 7.1 million in November, down sharply from October and nearly 900,000 lower than a year earlier. The “quit rate,” which serves as the ultimate barometer for worker confidence and the ability to climb the career ladder, remained stagnant at 2.0% in November (Swonk said she was shocked by this number in particular). Economists haven’t seen this level of inertia since January 2014, a period when the country was still clawing its way out of the Great Recession.
In a healthy economy, people quit for better-paying roles, driving wage growth for everyone. Today, however, workers are “clinging on” to the jobs they have out of sheer fear, Swonk said. This lack of movement has created a kind of mobility trap where the natural path to a middle-class raise has essentially vanished. While ADP data shows that “job-changers” saw pay growth accelerate to 6.6% in December, Swonk argues this is a statistical distortion. This “switching premium” is increasingly reserved for a tiny elite of specialized AI talent, while the average worker finds that the premium for job-hopping has evaporated, causing attrition rates to plummet and companies to freeze hiring.
This “frozen” state is further evidenced by what ZipRecruiter Chief Economist Nicole Bachaud wrote in a note was a “series low” in “other separations,” which economists usually interpret to mean retirements and transfers. These fell to just 232,000 in November. “Older workers are increasingly remaining in the labor market for longer,” Bachaud wrote, a trend driven both by rising life expectancy and “increased pressure on retirement savings due to affordability concerns.” It suggests potential economic hardship, as workers feel compelled to extend their careers. In other words, many boomers can’t enjoy their golden years in this economy.
People aren’t retiring, they aren’t moving, and they aren’t quitting. The labor market has (un)settled into an odd disequilibrium where hiring is at “rock-bottom” levels, as Samuel Tombs, chief economist from Pantheon Macroeconomics, wrote, but layoffs also remain low because companies are hoarding the workers they already have.
“We had overstaffing in the wake of the pandemic, so I see it as a bit of a hangover from the surge [of hiring] as the economy reopened and everything went crazy,” Swonk said.
This economic fracturing is taking a physical toll on certain parts of the country. The December ADP report revealed what, if the data is accurate, would be a massive localized crisis: the West region shed 61,000 jobs in a single month. This collapse was driven by the tech and professional sectors in the Pacific sub-region, which lost 59,000 positions. Swonk points to this as evidence of “jobless growth,” where firms are leveraging efficiency to “do more with less”. While some analysts from Oxford Economics argue the AI-driven shakeup is still “patchy,” Swonk notes that companies are aggressively cutting the white-collar support roles and middle-management positions that were once the bedrock of the middle class.
Whether those cuts reflect genuine productivity gains from AI—or simply a belated correction after post-pandemic overhiring—is still unclear, Swonk said.
Amidst this worrisome news, analysts are searching for a floor. BoFA notes that while the market is in a “low-hire, low-fire” mode, a slight rebound in their payroll estimate in December may suggest that “the worst of the slowdown is behind us.” Their report suggests it is possible that the labor market slowdown has “run its course” and that the deceleration in lower-income wage growth has finally leveled out.
However, the outlook for the rest of 2026 remains subdued. Jeffrey Roach, Chief Economist for LPL Financial, wrote that he expects monthly private payroll growth to stabilize at a meager 50,000 for most of the year. He said he was optimistic that private payroll growth may have “bottomed out,” but his chart spoke volumes about the precipitous decline in hiring.
While a temporary “sugar high” from tax refunds and minimum wage bumps in 19 states might provide a short-term lift to spending, Swonk said the relief will be short-lived. The economy, as it is, is incredibly vulnerable to a market correction.
“If you have anything that is a negative shock that hits the top 20%, you take down consumer spending pretty quickly,” Swonk said. “And that’s two-thirds of the economy.”
