WSJ What’s News - How the U.S. Job Market Could Change in 2025

Episode Date: January 12, 2025

What are the macro trends moving the U.S. labor market and how might that translate into your ability to find a new job? From the incoming Trump administration’s tariff and immigration plans to the adoption of AI, WSJ workplace and employment reporter Lauren Weber and logistics and supply chain reporter Paul Berger discuss what’s driving changes in the labor market, and how companies are planning for the future. Luke Vargas hosts. Further Reading The American Worker Is Becoming More Productive  America’s Role Reversal: Working-Class Blacks Make Gains While Whites Fall Back  What Trump’s Immigration Plans Mean for American Job Growth Help Wanted: U.S. Factories Seek Workers for the Nearshoring Boom  Learn more about your ad choices. Visit megaphone.fm/adchoices

What's in this McDonald's bag? The McValue Meal. For $5.79 plus tax, you can get your choice of junior chicken, McDouble, or chicken snack wrap, plus small fries and a small fountain drink. So pick up a McValue Meal today at participating McDonald's restaurants in Canada. Prices exclude delivery. Hey What's News listeners, it's Sunday, January 12th. I'm Luke Vargas for the Wall Street Journal and this is What's News Sunday, the show where we tackle the big questions about the biggest stories in the news by reaching out to our colleagues across the newsroom to help explain what's happening in our world. And this week, we're performing a health check on the US labor market, looking at everything

from the macro trends around unemployment to industry-specific trends around AI and whether people are trained for the jobs of the future. All right, let's get to it. All right, we've got a lot to get to today, so I want to bring Journal reporters Lauren Weber and Paul Berger into this discussion straight away. Paul covers logistics and the supply chain for us and we will see very soon why decisions companies are making up and down the supply chain are key to understanding the broader labor market. But first, Lauren, I want to start with you, given your focus on workplace issues and employment, given that we have just had the latest jobs report for December.

The report showed hiring ramping up, though the last month of the year can be a bit of an outlier given that it includes holiday hiring moves and bigger picture. The job market has cooled off since its red hot moments in 2022 and 2023. Generally speaking, what is the labor market looking like as the year gets underway and how are companies and employers approaching the new year? So we're waiting to see what's going to happen in 2025. Not only as longer term trends continue, but also as a new administration comes in, there's a lot of uncertainty. You know, we're seeing a little bit of wait and see as companies and employers try to figure out what's ahead. So the monetary policy from the Fed, they

have been cutting rates, but indicated in December that they were going to slow down those cuts. So that makes employers a little nervous about to what extent are we going to borrow money? Are we going to invest to grow. And then of course, with the new administration that has promised tariffs and major changes around immigration policy, these are all things that can really affect how companies forecast what their year ahead is going to look like, whether or not they're going to invest in new projects, where they're going to be able to hire or not hire. Got it. And the macro climate looks solid. We had the OECD, for instance, saying in a recent report that they're expecting be able to hire or not hire. Got it. And the macro climate looks solid.

We had the OECD, for instance, saying in a recent report that they're expecting U.S. growth to be pretty robust this year, though there are so many variables, for example. Our colleague David Uberti was reporting that we have seen a rise in delinquencies and defaults for some Americans that is sort of dimming the spending outlook for low and middle income folks. The type of thing, right, Lauren, that could change the calculus for employers that you just described.

Absolutely. And a lot of it is perception. You can look at the hard data and say, unemployment is still historically low, layoffs are still historically low. But yet when you talk to people, there's anxiety, people are staying in their jobs longer, which means they feel less confident that they can find another job, or maybe they're looking and they're not finding jobs. We've seen job openings go down quite a bit. So there's a sense from workers that the job market is simply not as strong as it was before

and they're feeling a little stuck. All right, lots of things on your radar there. And Paul, I imagine your focus on employers up and down the supply chain, that's going to be pretty important. They're going to be under the microscope in the next few months, specifically depending on how incoming President Trump ends up executing his trade agenda. Yeah, that's right. Trade obviously is an enormously important issue. It's basically what logistics companies thrive on.

And they appear to have been pretty spooked by some of the things that Trump has been threatening to do with regard to tariffs. Even if you're based in the United States, you're dependent on global flows of trade. And if you look at just say, one place like the US border with Mexico, logistics companies have been investing billions of dollars in warehousing, trucking and rail links along the border because trade there has been growing at a pretty rapid clip in the last few years. If Trump were to follow through on some of his threats of pretty significant tariffs on, for example, imports from Mexico, that could slow investment and of course,

slow hiring. Actually, to add on the tariffs, part of the reason why Trump wants to have these tariffs is the idea is to create American jobs and retain American jobs. And there's a research paper done by economists looking at the tariffs from the first Trump administration. What they found was that the tariffs were a politically effective strategy, meaning it was a message that Americans really responded to and liked, but they didn't actually end up leading to the creation of more jobs for Americans. leading to the creation of more jobs for Americans. All right. Well, speaking of jobs for Americans, Paul, I know another factor here is that US factories are expecting a nearshoring boom. I imagine that could be good for them in the broader US labor market in the long run if more manufacturing comes closer to the US. But as you heard in some of your recent reporting, it sounds like a number of businesses are

struggling to fill positions now, kind of evidence of a mismatch between their hiring needs and the labor supply, one that could maybe only intensify. Yeah, it is super interesting because what we're seeing is not just US companies, but also foreign companies that want to basically source more of the goods that they're selling domestically. They want to produce it in the United States. And so for at least some sectors of manufacturing, they are seeing increasing demand. But the problem that they're facing is basically hiring and retaining workers.

And it seems from some of the factory owners and operators that I've been talking to, that basically the problem is that younger Americans don't want to work in factories at the same rates that their parents and grandparents did. And so we had a situation for almost every month of last year where there was about a hundred thousand person shortfall between the number of positions that were being advertised and the number of jobs that were being filled. Right, we've got to take a very short break, but when we come back, we'll dig deeper into those mismatches, which we actually see all over the job market, as well as how those dynamics are fast changing thanks to technology. Stick

around. TD Direct Investing offers live support. So whether you're a newbie or a seasoned pro, you can make your investing steps count. And if you're like me and think a TFSA stands for Total Fund Savings Adventure, maybe reach out to TD Direct Investing. All right, so before the break, Paul was mentioning that fewer Americans are wanting to do certain types of manual labor at a time when we're seeing white collar workers having a harder time landing jobs and remaining unemployed for longer. Lauren, is this a problem with a ready solution, albeit one people may not want to take? We do have a lot of underemployed people in this country, you know, whether they're people

who have a college degree doing jobs that don't require that, or they're not able to move up the career ladder, not able to move up the job ladder, while many of these blue collar jobs go unfilled. It is a huge problem in the sorting of the job market here. When I was working on the manufacturing story, some of the factory operators I spoke to basically

said manufacturing has an image problem. In their opinion, it's not as dull and cold and dirty a job as it was 10, 20, 40 years ago. But also they in part blamed the American educational system and they were saying that they felt that too many kids these days are being pushed into four-year degrees that don't necessarily suit them. A growing number of factories are offering apprenticeship programs where kids can go straight from high school into say a four-year program. They spend three or four days a week in a factory and one or two days a week in a classroom and they come out at the end of it. They've been paid all the way through. They have zero debt and the factories I spoke to,

they come out with qualifications and a starting salary of something like $50,000 a year. Another thing just to add is, it's not just a question of like, well, you have a four-year degree and are there enough jobs that require four-year degrees available? It's also what are the jobs that are available? So for example, many, many people got the message for the last 10 or 15 years that you all need to learn how to code software. So go to a software engineering boot camp and learn how to do that. Well artificial intelligence can now do some amount of that.

A lot of those jobs that people were trained for thinking this is how I'm going to future proof my career, those jobs themselves are changing or maybe some of them are disappearing or the level of expertise you need to be a successful software engineer is now higher because some of the easier work can be automated. So within that white collar big bucket, you see a lot of jobs just transforming, sometimes faster than workers can keep up with the skills required. And Lauren, good luck trying to change businesses' minds about that, because as you reported, US productivity is up, driven partly by AI replacing

certain jobs and businesses then being able to lay people off as a result. That is one of the things I'm going to be watching closely this year. It's hard at the moment to draw a direct line between people being laid off because their job has been automated by artificial intelligence. There have been a few isolated instances where the companies have been explicit that that's

what they've done. We will see more of that. It will take a while because companies, you know, are still in many cases in the experimental phase with these new technologies, but we'll also see they're not going to replace somebody. They'll let employment numbers fall through attrition, or maybe they'll hire fewer contract positions so it may not show up in their own employment numbers at the end of the year, but it will affect vendors or other contractors

and subcontractors down through the supply chain of labor. And Paul, this is already coming up in the industries that you cover. Just this past week, we saw US dock workers and port employers, for instance, reach a tentative deal to end a long-running contract fight at the very center of which was automation. It's a massive issue, particularly for US dock workers all around the country. Every time there is a new labor contract that has to be negotiated with ports employers after wages automation is the big issue and here we're not even talking about AI we're talking about autonomous or semi autonomous machinery and dock workers are very worried that it will replace them and we've seen in the last

couple of years massive disruptions at ports on the West Coast, almost like a protest against automation. And we actually saw in October a walkout as part of the Eastern Gulf Coast labor talks. So many people worried about the prospect of their jobs becoming redundant because of technology. Lauren, are there any other trends you're watching that could shake up things in the labor market in the workplace in the year to come? Yes, lots of interesting things out there. The question around legal immigration is a huge one because there are many programs that allow people to come into the United States, often to fill jobs that are very difficult for employers to fill based on the U.S. workforce.

And those are all going to be looked at and reviewed. And there's a lot of internal division within the Trump administration about where those policies should head. So we're going to watch that closely. Down to things that have nothing to do with political policy, the push to get people back to the office. Amazon made a big splash in 2024 by recalling all of their office workers back five days a week.

The question is, will other employers say, well, that gives us some cover to now do this with our own workforces because we think that'll make us more productive. There's a lot of debate as well about many people feel they're more productive working from home. Bosses seem to feel, generally speaking, people are more productive when they're in the office so they can actually see them working. These are contentious issues that will just continue to come up. We also see companies just getting a little more strict about performance and what they …

These are the pips, right? Yes, performance improvement plans, pips. Everybody hates them. Managers hate to impose them. Workers hate being under a pip. In many cases, they're just a way to document someone's way out the door and tell them that their time is limited and hopefully they start looking for another job. Companies are using more of these performance improvement plans to kind of crack down on what people are doing

while they're at work and companies are under pressure to be more profitable. There's a real push for efficiency, profitability. So you know all of these factors are things that will continue to inform that always complicated relationship between workers and employers. I've been speaking to Wall Street Journal reporters Lauren Weber and Paul Berger. Paul, Lauren, thank you both so much. Thank you.

Thank you. And that's it for What's New Sunday for January 12th. Today's show was produced by Charlotte Gartenberg with supervising producer Christina Rocca and we got help from Anthony Bansi and Deputy Editors Scott Salloway and Chris Sinsley. I'm Luke Vargas and we'll be back Monday morning with a brand new show. Until then, thanks for listening.