The job market is ‘frozen.' That's not a good sign for DOGE casualties

CNN

31-03-2025

Summary
Job applications posted on Indeed from federal workers at DOGE-affected agencies spiked in February and were 75% above 2022 levels.
Business uncertainty about President Trump's economic policies is contributing to reduced hiring in white-collar sectors.
Indeed economist Allison Shrivastava describes the labor market as "a little bit frozen" but currently stable.
Labor Department data shows unemployment claims remain steady with 224,000 initial claims filed last week. The Trump administration's culling of government programs and agencies has resulted in an unprecedented wave of federal workers joining the ranks of job seekers — and new data shows a spike in job applications from agencies impacted by the Department of Government Efficiency.
Those job hunts are coming at a time when rising uncertainty around President Donald Trump's economic agenda is clouding businesses' decision-making and further slowing hiring — especially for specialized and white-collar roles.
They're entering a labor market that's 'a little bit frozen,' but stable for now, noted Allison Shrivastava, an economist at the Indeed Hiring Lab.
That was underscored in new data released Thursday by the Labor Department: Initial claims for unemployment benefits aren't spiking — in fact, they're mostly unchanged from last week.
There were an estimated 224,000 initial claims for jobless benefits for the week ended March 22, a decline of 1,000 from the prior week's upwardly revised tally.
The closely watched Labor Department report also showed that more federal workers are filing for unemployment than in the past; however, they aren't escalating on a weekly basis.
The number of federal workers who filed initial claims under the Unemployment Compensation for Federal Employees program totaled 821 for the week ended March 15, that's down from 1,066 filings the week before, Thursday's report showed.
The recent stretch of labor market data is showing 'two separate worlds,' RSM US economist Joe Brusuelas told CNN on Wednesday.
'One in which firms are managing their [workforces] incredibly carefully, because we still are under conditions where labor is tight; there's going to be constraints on labor supply, and that's what's contributing to the remarkable stability in overall claims,' he said.
'The other world is federal government employment, where, first, there's likely more people who are unemployed than the claims would suggest,' he added. 'Second, individuals are clearly beginning to hedge their bets around employment and are actively seeking work.'
Data released earlier this week from employment search site Indeed highlights an increase in federal workers searching for new jobs: In February, DOGE-adjacent applications rose 50%, ending the month at 75% above their 2022 levels.
It's common after presidential inaugurations for there to be an uptick in job applications filed by federal workers — but nothing ever to this scale, Shrivastava told CNN in an interview.
'This is definitely unprecedented,' she said. 'Not something we've seen before.'
'This is a very specialized group of people that are looking for jobs,' she said, noting jumps in unique keywords such as 'horticulture,' 'employee relations,' and 'policy analyst.'
White-collar jobs have been harder to come by in recent years, and that's largely due to the pandemic.
During that time, hiring soared in sectors such as technology, financial services and consulting as the global health crisis and low interest rates fueled remote work and altered consumer spending patterns.
However, what was expected to be a 'new normal' eventually shifted back to more familiar, pre-pandemic activity. Technology firms were the poster children of over-investment: Workforce levels became bloated and, in some cases, layoffs soon followed.
But, by and large, hiring has been petering out in most white-collar industries in part due to this recalibration, but also due to rising costs, uncertainty, and technology advancement, Shrivastava said.
In the meantime, other areas of the US jobs market have picked up a lot of the slack. Health care, leisure and hospitality, and government (mainly state and local) have driven job gains in recent years — a reflection of dynamics such as an aging population; post-pandemic returns to in-person services; and the backfilling of roles in the public sector, which played second fiddle to a private sector that was seeing steeper pay gains.
The pace of job growth has slowed during the past year. That's been expected: The blockbuster pandemic recovery couldn't continue forever; plus, the Federal Reserve's inflation-busting high interest rates were designed to curb demand.
But in recent months, there has been a concerning trend: The churn that's needed for a healthy labor market has slowed significantly. Businesses aren't hiring as much, workers aren't eager to quit, and those without jobs are staying on the sidelines for longer.
The latest Labor Department data showed that continuing claims — those filed by people who have received at least a week or unemployment benefits — dropped slightly from the prior week but remain elevated over the past year.
Economists initially chalked this up to election-year uncertainty, ongoing adjustments to over-hiring, the cumulative effect of fast-rising prices and the sheer weight of interest rates being at a 23-year high.
Once the election was decided, consumer and business sentiment shot higher, and hiring activity increased, according to an array of surveys and economic data.
That 'Trump bump,' however, has given way to rising levels of economic uncertainty from businesses and consumers who are reporting jitteriness about the effect of sweeping policy actions such as broad-based tariffs, mass deportations and the slashing of federal jobs and funding.
'We've been a little bit frozen for a while; you've seen those headline (jobs) numbers, and frozen is a kind of stability,' said Shrivastava. 'But the longer that goes on, the more likely it is that we'll have impacts … like frostbite.'