Job market struggles as companies cut labor costs, says Gary Cohn

In recent discussions, Gary Cohn, vice chair of IBM and former director of the National Economic Council under President Trump, highlighted significant issues in the job market, stating it has experienced a notable degradation. This situation has been particularly alarming as the Federal Reserve acknowledged the cooling labor market, resulting in the recent cut of the benchmark interest rate by 0.25 percentage points amidst ongoing concerns about economic growth and employment rates. On a broader scale, recent data indicates a drastic decrease in job creation over the past few months, with new jobs declining from over 100,000 to less than 50,000 monthly. Cohn attributed this decline to mounting pressures on companies facing rising input costs without the ability to pass these costs onto consumers. In an effort to maintain profit margins, organizations have turned to reduce labor costs, resulting in a shift from the previously observed 'hoarding labor' mentality during the COVID recovery phase to a more aggressive management of workforce expenses. This change has not been limited to any one sector but appears broadly across various industries, indicating a troubling trend for job seekers. Compounding these challenges for those entering the workforce, entry-level job openings have dropped significantly, particularly since January 2024, falling by 29%. Gen Z individuals seeking employment are faced with a competitive and contracting job market, particularly in technology and manufacturing sectors where the need for entry-level roles is diminishing due to advances in automation and AI. However, healthcare remains a beacon of hope, with a slight increase in demand for junior roles, such as caregivers and technicians. For Gen Z, the shift represents not only a challenge but also an opportunity to realign their approach toward career development. Given their strong inclination towards career advancement and work-life balance, employers now have critical insight into what this generation values as they navigate their career paths. Engaging with Gen Z about skill development and outlining career trajectories could help in retaining talent in an increasingly competitive job market.