Unemployment Is Historically Low. Why Is It Still So Hard to Find a Job?
You aren't imagining it -- the job market for many workers is still very tight.
Last Friday the May jobs report came out. Like March and April the report slightly beat expectations in terms of the number of jobs created for the month and the unemployment rate remains historically low at 4.2%.
This quote from the Wall Street Journal (paywall) on investors' reaction to the report sums it up pretty well: “The market is happy it’s not worse, given everything we’re dealing with in terms of uncertainty and tariffs,” said Priya Misra, a portfolio manager at J.P. Morgan Asset Management. “The job market is the linchpin of the economy, and it still looks like it’s chugging along—at a slower pace, but that’s OK.”
If the economy is producing new jobs and the unemployment rate remains low, you may be wondering why you are having such a hard time finding a job.
While there are lots and lots of reasons why any individual job seeker may be struggling, there are two macro-trends that may explain why so many people are frustrated in their job searches.
1. Most of the jobs created in May were in just three sectors
As this chart shows, the vast majority of the jobs were in healthcare, education, and leisure and hospitality. If you are in those fields you may be having an easier time of it. If you aren’t, you are likely having a very hard time.
Making matters worse, the retail and business services sectors lost jobs. While layoffs have slowed down, fewer jobs in the sector you are targeting makes the market tighter. Tech, in particular, is still not adding jobs. According to Indeed, job postings for software developers were down 40% in May 2025 as compared to February 2020.
2. Employers are cautious.
The uncertainty in the market is making companies reluctant to make any big moves on headcount – up or down. Layoffs have slowed (for the most part) as employers are fearful of getting caught without the people they need if the market strengthens as it did in 2021. But they are also wary of adding headcount until they have a better sense of where the economy is going. They are also uncertain about what AI will mean for their workforce. No company wants to add a lot of new employees only to have to eliminate those jobs in 6 or 12 months, whether because of a downturn or a changing job landscape.
Given these trends, what should job seekers do now?
If you can, go where the jobs are: The growth sectors are healthcare, education, and hospitality. These are also the sectors that are the most “in person” focused, making many of their jobs less exposed to AI (for now). If you have a background in these industries you may find your fastest path back to a job is to return to a job very similar to the one you had before. If you don’t come from these areas but are open to breaking into them, look for jobs like the ones you’ve had before at companies in or focused on these sectors. So if you are a software developer consider focusing on edtech or healthtech. Or work with a career coach to see how your prior skills could be applied to jobs in those sectors.
If you need a break from the job hunt, take one: Job seeking is hard and it can erode your self-esteem. If your financial situation is reasonably healthy, now is a great time to take a short break from the application treadmill. The job market inevitably slows in the summer months due to vacations anyway. Focus on networking, practicing your elevator pitch, and coming up with answers to common interview questions. Give yourself some time to take a breath and come back to the search refreshed in the fall.
If you want to make a job switch, keep at it: On the other hand, if you have a job now but want to find a new one, keep plugging away. It is just going to take a long time, but consistent effort will eventually yield results. Sure, take some time off from job searching this summer if you want, but you may be better off slowing your search, not stopping, if you are determined to make a move.
Find support: It’s not your imagination – it’s rough out there. Don’t try to do it alone. Ideally find support across a few areas – in your family, in your community, and in your professional network. Each person has something different to offer – validation, a shoulder to lean on, a door that can be cracked open. No one person can be everything, so find lots of people to join your team and help you to keep going.