Economist Mohamed El-Erian Warns the Hiring Slump May Be Here to Stay

Also In This Episode

• El-Erian on the Job Market and AI’s Role in the Hiring Slowdown
• MetLife 2026 Employee Benefit Trends Study
• CompTIA Job Seeker Trends 2026

Full Episode Transcript

Pete Newsome: 0:00

Welcome back to Cornering the Job Market. Today’s Wednesday, February 18th. I’m Pete Newsome, and today’s workforce news and headlines include more job hugging. It’s apparently job hugging week because we have the second study that’s referencing that relatively new phrase. It doesn’t seem new anymore. We’ve seen it so much over the past year. But the second study referencing it in their headline, and this is from MetLife, who says it’s undermining the workplace. I’ll get into why that’s a problem. We also have new COMPTIA research that tells us what millions of Americans are doing differently when they’re seeking jobs this year. But first, the U.S. economy is booming. That’s what we’re told, right? The White House is wanting us to believe things are going so well, but we know that hiring is not. It’s definitely not booming. And one of the most respected economists in the world has gone on record telling us that we probably shouldn’t expect that to change. Mohamed El Arian is the former CEO of PIMCO, and he wrote an op-ed in the Financial Times, calling this pattern unusual and potentially more damaging than anything we’ve seen before. That is a profound statement. Job growth last year averaged under half a percent, and that’s the weakest we’ve seen outside of a recession in more than two decades. And that number may actually be generous.

1:20

By now, everyone knows the BLS has gotten into this habit of revising their initial jobs data downward. So we see monthly reports that look good on the surface, but reality is something altogether different. It’s great that we added 130,000 jobs in January, in theory, but at this point, who actually believes that, right? No one, no one should. No one should rely on that number not changing. So we have this gap right now where the economy says one thing, and a lot of the economic data does look good, but the hiring market says something completely different. L. Arian says that that kind of divergence has only happened a few other times in modern history, and usually during recessions, not during times of expansion like this, because GP is expanding. We can’t, we have to accept that, but it’s not because the job market is thriving. So that is absolutely what job seekers are feeling right now. Economic indicators saying one thing, real world activity saying something entirely different. So employers are cautious right now. We know that. First is what he calls AI front running. Companies aren’t waiting for AI to be fully deployed. They’re restructuring workflows and holding off on hiring now because they believe AI will absorb the work soon. We’re seeing that. I’m seeing that in staffing. I’m hearing it from my peers around the country. Employers are delaying backfills specifically because of AI expectations.

2:52

Second, the post-COVID hiring that went on that went crazy. Well, he believes that there’s still a correction going on from that because companies brought in too many people on the other side of COVID. So according to El Arian, firms are no longer hoarding workers. That is definitely true. So that correction is playing out. And then third is policy uncertainty. Everyone’s waiting for an economic recovery or at least stability, and we have anything but right now. So politics aside, you can’t make decisions and you can’t plan when you never know what’s going to happen from day to day. The key line from what L. Arian said is this time around, it may well last longer because we are just at the start of AI adoption with robotics around the corner and quantum computing coming next. He says that the challenge for 2026 is managing the risks of an economy that may no longer need as many workers to grow. And that is exactly what I’ve been trying to warn people about, what many others have as well, is businesses may be going well and GDP may increase. That’s great, but not so great if it’s at the expense of the American workers.

4:10

And so two things can be true. The economy can be doing well, and the job market can be suffering. So that’s my fear. That’s what I’m anticipating at this point. But we’ll have to see how it plays out. I mean, the AI adoption curve is rapid. Um, I think it’s only going to pick up speed. I want to be wrong about its impact, but that is my perspective on it right now. So we’ll keep paying attention to that. I’ll keep reporting on it. Also, today, MetLife’s new study says 56% of workers are staying at their jobs out of necessity, not commitment. The loyalty score is up this year in a study that they did, which sounds great on paper, but when you dig into it, more than half of those people who are staying are doing so because they feel like they have to, not because they’re happy. Only 18% of employees say they’re staying because they genuinely want to. So everyone else who’s saying is some combination of stuck, scared, or settling. That’s not good. That’s pretty awful. Nearly a third say the job market is just too uncertain to risk making a move.

5:18

And financial confidence among employees is at its lowest point since 2012. I mean, think about that. It’s 2012. That connects right back to what L. Arian was saying. If the market isn’t producing opportunities, of course people are clinging to what they have. Now, employers may be uh looking at that stat, the retention stat, thinking everything’s fine, right? We’re doing a good job here. But that’s that’s a false flag. Uh, I mean, just because people are staying doesn’t mean things are good. And what is happening is they’re present, but they’re not engaged. That’s what the data is telling us. Only half of these necessity-driven employees are actually engaged in their work. And they’re significantly less likely to be healthy. That means higher absenteeism, lower productivity, nothing good. That is the hidden cost of job hugging. It’s an important perspective and way of looking at it. And MetLife says the fix is to make a better connection. Don’t offer perks, don’t give Pizza Fridays. Employees want to feel uh genuinely seen and valued and supported at work. So when that happens, then they feel connected and they’re much better producers. So their outcomes change dramatically across the board. So they’re healthier, they’re more engaged, and they’re staying because they actually want to, and that’s what we should all strive for. Todd Katz from MetLife nails it here. He says retention alone can give employers a false sense of stability while everything underneath is eroding.

6:50

What he’s describing is the retention trap, which means if employers are only there because they’re afraid to leave, then you have a disengaged workforce, it’s underperforming, and the moment the market loosens up, they’re gone. Now, here’s the thing is the market really going to turn at this point? And back to again what L Arian was talking about, this time might be different. And I can’t help but wonder if employers know that, right? I mean, it the pendulum is definitely swung to the employers right now. I don’t think anyone would question that, specifically in the white-collar space. And we do have to continue to remember there’s almost two job markets right now. As I said yesterday, if you’re on your feet, companies are looking for. If you have a job where you’re on your feet right now, that’s that is a good place to be. And that is in healthcare and hospitality. That job market is strong. But if you sit at a desk like I’m doing behind a computer, well, then it is very much an employer’s market. So that’s going to be the interesting thing to see play out. Is it is a pendulum going to swing back? And all these companies who aren’t maybe taking care of their employer employees as well as they should will regret it. So, how about this? Why don’t we just do the right thing regardless? So employers don’t take advantage of the power that you have currently, maybe temporarily, maybe not.

8:12

Do the right thing and everyone wins. Because what this report tells us, and I think is is really interesting, is not just job hugging as a thing, right? Employees are disengaged. Great. What does that mean? Well, they’re actually telling us what it means in this report. So that is reason enough, not just because you should do the right thing, but because it benefits your business employers. If you have a disengaged workforce, you want to turn that around as soon as possible. So we’ll wrap up with CompteA’s new job seeker trends report that came out. It tells us that 53 Americans are actively looking for work right now. Okay, so a lot of people are staying, but almost a third of uh the labor market is looking for work right now. That is well above the historical average. CompTIA is calling it a K-shaped job search, where some people are looking out of optimism, others out of fear and need for security.

9:06

So that’s two different, very different mindsets that we’re seeing right now driving the same behavior. And I do find it interesting that uh Matt Life’s report says people are staying out of fear, uh, which is certainly a thing and probably wise to a significant degree. But this is saying that that’s a reason to look. So if you I if you don’t feel uh your employer is stable or your job is stable there, although the data has shown our own survey that we did for Q1 shows that employees generally do feel very secure in their jobs right now. They’re afraid of the future, and rightfully so. But what I’ve seen in our own study shows that employers employees feel relatively secure right now. This seems to indicate um uh a different result. So from one survey to the next, you never know what you’re gonna get. And that’s why I like talking about all of them, because I think cumulatively they tell us what’s going on, right? They they paint the picture, not just one survey, not just one study, but look at all at all of them together. So um I I I personally believe that more people are afraid to leave than than um than are looking. But hey, this data says 53 million people are looking right now. That is a massive number for sure. Now, the main reason to to move is pay. No, no surprise there, it always is. Um, and 46% are seeking a better work-life balance. Now, for skills job seekers plan to learn, AI is number one. Digital fluency is overwhelmingly rated as important, and nearly half say AI is already factoring into their decision to upskill, as it should. Uh, workers are getting the message.

10:44

That’s good to see. The last thing I want to share from this report is that nearly half of all job seekers right now have heard about or experienced entry-level positions being cut or frozen because of AI. The report’s trying to tell employers, hey, you know, caution against that. Don’t let your employees feel that way. I think employees should feel that way because it’s true. That’s what is happening in the job market right now. I don’t see that turning around. You have to elevate your game, and the best way to do that is AI. So it’s great that people want to learn those skills. Do not rely on your educational institution, do not rely on your employer. Don’t rely on anyone but yourself to embrace AI, learn it fully, and that is the best thing you can do. So you’re not really entry-level at this point. And that is what is so powerful about it right now, where you can teach yourself new skills, technologies. You can use it to learn things that aren’t related to technology, right? So embrace AI fully, use it to elevate your resume, your experience, and what you can ultimately deliver to an employer, right? Because that’s what companies need and want. They want someone who can take them to another level. And again, just don’t wait on anyone else if you’re entry level to um to tell you what to do there. Take the ball by the horn. So that’s it for today. Thank you for listening.

12:06

Here’s our fun fact before we close focus recovery. It takes 23 minutes to get back into a flow state after a distraction. Man, that happens to me constantly. I believe it. 23 minutes, that is that is reason for deep work. If you haven’t read that book or haven’t seen anything about that, Cal Newport wrote a book called Deep Work. Highly recommend it. I wish I could work that way more because I am so much more productive. So flow state, I believe it. That’s it for today. Thank you for listening. Please like, subscribe, share with anyone who you think might be interested. And I look forward to talking to you tomorrow.