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A cooling labor market, characterized by sluggish hiring and anemic job creation, made it hard for job seekers to find work in 2025, according to economists.
“It’s fair to say that 2025 was a hiring recession in the United States,” Heather Long, chief economist at Navy Federal Credit Union, wrote in a note Friday. That recession affects both blue- and white-collar workers, she wrote.
U.S. employers added 584,000 jobs last year, according to a Bureau of Labor Statistics report issued Friday. That marks the worst year for total job gains outside of a recession since 2003, according to Long. There has been little job creation since April, meaning most gains took place early in the year, she wrote.
Most hiring has also been concentrated in the health-care sector, making it difficult for workers to participate across the broad labor market, economists said.
“Healthcare alone accounted for roughly 69% of all job growth across 2025,” Nicole Bachaud, a labor economist at career site ZipRecruiter, wrote in a note Friday. “The reliance on a single industry to keep job growth positive uncovers the unstable foundation in play going into 2026.”
Long-term unemployment has also climbed. In December, 26% of all unemployed workers had been out of work for at least six months, the highest share since February 2022, according to the BLS.
That suggests “unemployment is increasingly becoming a permanent state rather than a temporary transition,” Bachaud said.
On Wednesday, the Bureau of Labor Statistics reported the hiring rate had fallen to 3.2% in November. That’s one of the lowest rates since 2013, according to Long.
Job market likely to remain cool for months
Overall, the current state of the labor market shows a stark turnaround from the scorching market of 2021 and 2022.
At that time, the so-called “great resignation” was in full swing, with job openings at record highs, pay growth at its highest in decades and workers able to leave their jobs in droves for better positions.
Economists called that labor market, in which workers enjoyed considerable leverage, unsustainable over the long run.
The Federal Reserve raised interest rates to help cool the labor market and rein in inflation, which in 2022 hit its highest level in about four decades.
Additionally, several factors coalesced into an anemic hiring environment, Long wrote: economic policy such as tariffs, business uncertainty, over-hiring in recent years, and a reluctance to hire more workers until the use cases for artificial intelligence become clearer.
While the hiring recession will likely continue in the first half of 2026, the second half should be better for job seekers, due to tax cuts, lower interest rates and a clearer tariff picture, Long wrote.
How job seekers can stand out
There are ways for job seekers to improve their chances at landing a new position, even in a lackluster hiring environment, according to job experts.
1. Highlight your skills — and leverage AI to help
Employers and recruiters have gradually shifted to so-called “skills-based hiring,” meaning they prioritize a candidate’s skills and experience rather than educational attainment, said Sam DeMase, a career expert at ZipRecruiter.
ZipRecruiter data shows 88% of entry-level jobs omit degree requirements in the job description, and about 70% of recently hired workers have less than a bachelor’s degree, said DeMase.
“Many employers want to hire folks who can hit the ground running immediately,” she said.
Job seekers should ensure there’s “strong” alignment between the job description and the experience and skill sets they outline on their resumes and cover letters, DeMase said.
This helps candidates stand out with recruiters and make it through the automated applicant tracking systems on which employers increasingly rely to sort applications, she said.
DeMase gave an example of what candidates can write to highlight value proposition: “Using my background in X, I helped companies achieve Y.” For example: “Using my background in digital marketing and extensive background in data analysis and content planning, I helped companies craft innovative campaigns that attract and delight the ideal audience and drive revenue.”
Generic skills statements like “I have good people skills and attention to detail” won’t work well in 2026, she said.
Priya Rathod, a career expert at job site Indeed, recommends that applicants use artificial intelligence to match keywords in job descriptions with those in their resume. This helps applicants get through the first round of resume screening, she said.
2. Target job sectors that are growing
It’s important for job seekers to follow employer demand, said Rathod.
Workers should target certain areas of the job market that are growing, including health care, skilled trades, infrastructure and revenue-critical jobs, especially within technology, she said.
“Getting hired in 2026 isn’t necessarily about applying everywhere,” Rathod said. “It’s really about aligning your skills and where employers are actually investing.”
For example, a worker with a sales background may not have specific experience in health-care sales, but they can play up their sales skills in an application, Rathod said.
Think about transferable skills, and work to upskill via additional credentials, licenses or certifications to fill in any gaps, she said.
3. Networking is your friend
Don’t ignore the value of networking, Rathod said.
Whether a person has a job, is unemployed, or has a part-time role and is looking for full-time work, “networking is always going to be one of your best friends,” she said.
This can take several forms: Engaging with industry and community organizations, and talking to friends and colleagues, either in person or online, she said.
4. Ignore the one-page resume ‘myth’
DeMase recommends certain nuts-and-bolts resume formatting guidelines to further help make it through applicant tracking system firewalls.
For instance, resumes should be in a single-column format with clearly labeled sections, including a headline, about me, achievements, work experience, areas of expertise and education, if applicable, she said.
Resumes don’t need to be limited to one page.
“There’s a myth about the one-page resume,” she said. “Don’t sacrifice experience to shorten your resume.”
A resume can be two pages for people with five to 10 years of experience, and three pages for those with more than 10 years of experience, DeMase said. These aren’t hard and fast rules, however, and may differ based on industry.
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2026-01-10 08:40:01
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