Navigating a Shifting Labor Market: Analyzing Why Competition is High and Mobility is Low

How a dynamic economic environment, AI adoption, and lean staffing have reshaped workforce dynamics in 2025.

With the threat of elevated corporate taxes recently being eliminated by the current administration, interest rate cuts inbound, inflation leveled, recession fears quelling and the broad market settling after tariff-related concerns through the first 2 quarters of 2025, most companies are likely to be operating cautiously optimistic in an economic sense in the near term. This should open the door for a more opportunistic labor market in the coming years. For now though, the labor market remains extremely competitive, with a relatively steady 4.3% unemployment rate as of September 2025 (which is below the approximate natural unemployment rate), and an average job search taking about 3-6 months. To illustrate how truly competitive the job market is, FlexJobs Career Expert Cidnye Work recently stated that, “you have an 8.3% probability of getting a job interview from one job application.”

The labor market is cyclical. Currently, low unemployment and terminations are contributing to low vacancies and mobility. Once unemployment and/or vacancies rise, mobility will increase, similar to (but to a lesser extent than) the ‘Great Resignation’ that began in 2021. Since job searches are taking longer than they traditionally have and companies have slowed growth-related hiring, the labor market is stagnating. The stagnation is indirectly pushing some people out of the job market, and also contributing to ‘job hugging’ which is a term describing people holding on to their job despite wanting to move on. It is contributing to prolonged constriction in the labor market. ‘Job hugging’ isn’t necessarily a bad thing since it is generally advantageous to have the financial stability of employment while looking for a new job. However, it may stunt professional growth, and can be costly for companies if productivity or morale decline.

There have been some significant layoffs in recent months, which some people have compared to the ones during the 2008 financial crisis. However, the economic climate today differs greatly from the 2008 financial crisis in the way that many (generally large) companies are actually doing very well financially and are continuing to see enterprise and financial growth, whereas in 2008 many companies were suffering financially which forced them to execute layoffs. Today, companies are choosing to optimize their budgets by operating with leaner staff. Labor costs are generally a significant expense (and are rising), particularly for larger companies, so many are executing layoffs or reducing hiring to maintain or pursue their desired profit margins. The common public reasoning is often that it is for the benefit of their stakeholders (investors) to maximize operating profit by trimming expenses. Staff reductions are also oftentimes seen when companies choose to offshore specific functions/departments, or during mergers & acquisitions.

Many companies are using technology, such as artificial intelligence and automation systems, to supplant their workforce. This is creating a particularly bleak outlook for recent college graduates and young professionals who are left with less opportunities to gain experience. As of October 2025, recent college graduates had an unemployment rate of 9.3%, about 2.5 times larger than the more established bachelor’s degree holders, according to Forbes. This issue is compounding as companies seek to leverage artificial intelligence instead of creating entry-level roles.

The labor climate has profoundly transformed since the pandemic-era ‘Great Resignation’ of 2021 when many Americans chose to leave their positions in search of new opportunities. This was primarily driven by a heightened desire for more flexible hybrid or remote work opportunities, job dissatisfaction, limited career advancement opportunities, wage stagnation and the need to pursue greater compensation as a result of the rising cost of living. In retrospect it can be argued that the ‘Great Resignation’ may have contributed to over-hiring and unsustainable wage growth. Also, the argument can be made that advancements in artificial intelligence and automation systems are actively quelling demand in the labor market, and that companies are more receptive to it now than they were in 2021. For a variety of factors, the labor market is highly competitive in the short term and will likely remain so until the current cycle ends, catalyzing more mobility.

Andrew C. Belton, MBA is a Marketing, Proposal and Content Management Professional, Writer and Owner of Symmetrical Media Marketing where he helps small businesses to create effective digital marketing strategies. He has been featured in LinkedIn News, LinkedIn Pulse, Startup Stash, Venture and Business2Community. He is a Philadelphia native, West Chester University of Pennsylvania graduate and is passionate about helping small businesses, education and challenging the limits of technology and communications.