The American labor market is a tale of two realities. If you have a job, you’re likely to keep it—private-sector layoffs are at historic lows. But if you’re unemployed or itching to switch roles, the outlook is grim. Welcome to the low-hire, low-fire economy, where stability for some comes at the cost of stagnation for others. A Surprising June, But Not for Everyone In June 2025, the U.S. economy added 147,000 jobs, surpassing expectations, according to the latest government data. But dig deeper, and the numbers tell a less rosy story. A staggering 85% of those gains came from just two sectors: education and health care, as calculated by Mike Konczal, a former Biden economic official. Meanwhile, hiring in other industries, including white-collar professional and business services, barely budged. This lopsided growth underscores a troubling trend: the labor market is freezing up. The Frozen Job Market The term “frozen job market” captures the economy’s lack of dynamism. Employers are holding tight to their workers, with layoffs in May dropping by 188,000, hovering near multi-decade lows. But hiring is also stalling—new job hires fell by 112,000 in May, well below pre-pandemic levels. For those out of work, the situation is even bleaker. The number of Americans collecting unemployment benefits has climbed to its highest level since 2021, signaling that finding a new job is taking longer than ever. This stagnation is a departure from the churn that typically defines a healthy labor market. In normal times, workers move fluidly between jobs, industries hire aggressively, and opportunities abound. Not now. “We’re in a complex jobs market—it’s not falling apart, but the lack of dynamism, the lack of churn, and the lack of hiring has been punctuated in the first half of the year,” says Nela Richardson, chief economist at ADP. Why the Freeze? Several factors are locking the labor market in place. First, employers are reluctant to let go of workers after years of labor shortages. “Many employers are loath to lay off workers until they see the whites of the eyes of a recession, having had such problems finding suitable workers in the first place,” wrote David Kelly, chief global strategist at J.P. Morgan Asset Management. Companies, burned by the hiring challenges of the post-pandemic recovery, are holding onto talent like never before. Second, the rise of artificial intelligence (AI) is reshaping how employers view their workforces. As businesses experiment with AI to boost productivity, they’re hiring less, particularly in white-collar sectors where automation can replace or augment tasks. This technological shift is reducing the need for new workers while keeping existing ones in place, further slowing job market churn. Finally, economic uncertainty is making employers cautious. With inflation concerns lingering and recession fears never fully fading, businesses are hesitant to expand their payrolls. The result? A labor market that’s stable but stagnant, with little room for new entrants or job-switchers. A Tale of Two Labor Markets The current landscape creates starkly different experiences. For those with jobs, the low risk of layoffs offers a sense of security rarely seen in modern times. But for the unemployed or those seeking better opportunities, the market feels like a dead end. The contrast is striking: if you only look at layoff numbers, the economy seems robust. But if you focus on hiring, it’s the weakest in years. This divide has real consequences. Unemployed workers are stuck in limbo, facing longer searches for jobs that may not materialize. Those unhappy in their current roles—whether due to pay, conditions, or career goals—find themselves trapped, with fewer openings to jump to. The lack of mobility stifles wage growth and career progression, creating a sense of economic inertia. How Does It Get Unstuck? The big question is how—or when—this frozen market thaws. There are two paths forward: a surge in hiring or a spike in layoffs. The former would signal renewed confidence, with businesses expanding and creating opportunities across sectors. The latter, however, could tip the economy into a downturn, as layoffs often snowball during recessions. Neither scenario is guaranteed, but the status quo is unsustainable. A labor market without movement isn’t just bad for workers—it’s bad for innovation, productivity, and growth. Policymakers and businesses face a delicate balancing act. Encouraging hiring without triggering economic instability will require addressing the root causes of caution, from AI-driven disruption to lingering economic uncertainty. For now, the labor market remains a paradox: secure for some, stagnant for others, and stuck in a holding pattern that benefits no one in the long run. America’s labor market is at a crossroads. While low layoffs paint a picture of stability, the lack of hiring reveals a deeper problem: a market that’s lost its mojo. For the millions of Americans looking for work or a better job, the frozen economy is more than a trend—it’s a barrier to opportunity. Until hiring picks up or the market shifts, the divide between the employed and the jobless will only grow sharper.