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Economists say a cooling labor market, marked by weak employment and poor job creation, will make it harder for job seekers to find work in 2025.
“It’s fair to say 2025 was an employment recession in the U.S.,” Heather Long, chief economist at Navy Federal Credit Union, said in a note Friday. The recession is affecting both blue-collar and white-collar workers, she wrote.
U.S. employers added 584,000 jobs last year, according to a Bureau of Labor Statistics report released Friday. Long said it was the worst year for total job growth since 2003, excluding recessions. There has been little job creation since April, meaning most of the increase occurred at the beginning of the year, she wrote.
Economists say most jobs are concentrated in the health sector, making it difficult for workers to participate in the broader labor market.
“Healthcare alone accounted for approximately 69% of all job growth in 2025,” Nicole Bashaw, a labor economist at job site ZipRecruiter, said in a note Friday. “Reliance on a single industry to keep job growth positive reveals a shaky foundation heading into 2026.”
The long-term unemployment rate is also rising. As of December, 26% of all unemployed people had been unemployed for at least six months, the highest percentage since February 2022, according to the BLS.
This suggests that “unemployment is becoming a permanent condition rather than a temporary transition,” Bashaw said.
On Wednesday, the Bureau of Labor Statistics reported that the employment rate fell to 3.2% in November. Long said this is one of the lowest interest rates since 2013.
The job market is likely to remain depressed for several months
Overall, current labor market conditions represent a significant turnaround from the torrid market of 2021 and 2022.
At the time, the so-called “Great Retirement” was in full swing, with job openings at record highs and wage growth the highest in decades, allowing workers to leave their jobs in droves in search of better jobs.
Economists called a labor market in which workers enjoy significant influence unsustainable in the long term.
The Fed raised interest rates to cool the labor market and curb inflation, which reached its highest level in nearly 40 years in 2022.
Additionally, Long wrote that several factors combined to create a poor employment environment, including economic policies such as tariffs, economic uncertainty, overemployment in recent years, and not hiring more workers until the use cases for artificial intelligence were clearer.
Long wrote that while the employment recession is likely to continue in the first half of 2026, the second half should improve for job seekers due to tax cuts, lower interest rates and clearer tariffs.
How job seekers can stand out
Employment experts say there are ways job seekers can increase their chances of landing a new position, even in a lackluster hiring environment.
1. Highlight your skills and leverage AI to help
Employers and recruiters are gradually moving toward so-called “skills-based hiring,” which means prioritizing a candidate’s skills and experience over academic background, said Sam Demers, career expert at ZipRecruiter.
According to ZipRecruiter data, 88% of entry-level jobs omit degree requirements in the job description, and about 70% of recently hired workers have a degree less than a bachelor’s degree, Demers said.
“Many employers want to hire people who can hit the ground running,” she says.
Job seekers should make sure there is a “strong” match between the job description and the experience and skill sets they list on their resumes and cover letters, Demers said.
This allows candidates to stand out to recruiters and get past the automated applicant tracking systems that employers increasingly rely on to categorize applications, she said.
DeMase gave an example of what a candidate could write to highlight their value proposition: “I used my background in field X to help companies achieve Y.” For example: “I used my background in digital marketing and extensive background in data analysis and content planning to help companies create innovative campaigns that attract and delight their ideal audiences and drive revenue.”
Generic skill descriptions like “I have excellent interpersonal skills and attention to detail” won’t work well in 2026, she said.
Priya Rathod, career expert at job site Indeed, recommends that applicants use artificial intelligence to match keywords in job descriptions with keywords in their resumes. This will allow applicants to pass the initial screening of their resumes.
2. Target growing occupations
Rathod said it is important for job seekers to comply with the requirements of employers.
He said workers should target specific sectors of the growing job market, such as jobs important to health care, skilled trades, infrastructure and revenue, especially those related to technology.
“Being hired in 2026 doesn’t necessarily mean you can apply anywhere,” Rathod said. “The key is aligning your skills with where the employer is actually investing.”
For example, employees with a sales background may not have specific experience in health care sales, but can demonstrate sales skills in their applications, Rathod said.
Think about transferable skills and seek to upskill through additional certifications, licenses or certifications to fill gaps, she said.
3. Networking is your friend
Don’t ignore the value of networking, says Rathod.
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. It’s engagement with industry and community organizations, and conversations with friends and colleagues in person and online, she said.
4. Ignore the one-page resume “myth”
DeMase recommends certain basic resume formatting guidelines to further get past the firewalls of applicant tracking systems.
For example, she said, resumes should be in a one-column format with clearly labeled sections such as a heading, about yourself, achievements, work experience, specialty, and education.
Your resume doesn’t have to be limited to one page.
“There’s a misconception about one-page resumes,” she says. “Don’t sacrifice experience to shorten your resume.”
Resumes should be two pages for people with five to 10 years of experience, and three pages for people with more than 10 years of experience, Demers said. However, these are not hard and fast rules and may vary by industry.
