# Economic Policy Changes: Impact on Labor Market and Recruiting
In recent years, ongoing economic policy uncertainties have shaped [hiring trends](https://hrexecutive.com/how-to-harness-this-exciting-moment-of-change-for-ai-in-recruiting/) and changed how HR approaches talent acquisition. According to Andrew Flowers, chief economist at recruitment marketing platform [Appcast](https://www.appcast.io/), while the labor market in 2025 remains relatively stable, shifting economic forces will continue to redefine recruiting strategies and workforce planning.
## Federal Reserve’s Cautious Approach
Federal Reserve Chair Jerome Powell held a [press conference on March 19](https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20250319.pdf), highlighting the balancing act employers now face: navigating persistent inflation risks while maintaining flexibility for future adjustments.
The Federal Open Market Committee (FOMC) maintained the federal funds rate at 4.25% to 4.5%, showing a cautious stance amid economic uncertainty. Powell emphasized that the Fed isn’t rushing policy changes and will closely monitor economic data before making further decisions.
The labor market continues showing strength, with an unemployment rate of 4.1% and steady job gains in recent months, according to the [Bureau of Labor Statistics](https://www.bls.gov/news.release/pdf/empsit.pdf). Powell noted that wage growth is outpacing inflation but at a sustainable pace, and current labor conditions aren’t significantly driving inflationary pressures.
Powell described the current environment as having “remarkably high” uncertainty due to rapid policy changes in trade and fiscal policy. “It is going to be very difficult to have a precise assessment of how much of inflation is coming from tariffs and from other sources,” he stated.
## The “Great Stay” Replaces the “Great Resignation”
According to Flowers, the labor market in early 2025 shows a significant shift from the “Great Resignation” to the [“Great Stay”](https://hrexecutive.com/hunting-for-hidden-gems-in-the-era-of-the-big-stay-crms/), with job-switching rates declining and indicating greater workforce stability.
“There’s a lot less switching, and there’s a lot less churn in the labor market today than there was three years ago,” said Flowers. “So, hiring, quitting and layoff rates are all very low.”
This shift is substantial – in the year leading up to July 2022, nearly 52 million workers quit their jobs. In contrast, that number dropped to 39 million over the past year. “You’re looking at basically a million fewer workers each month quitting their jobs today than roughly three years ago,” Flowers explained.
## Changing Demographics in the Workforce
Foreign-born individuals now represent nearly one in five people working in the U.S., according to [USA Facts](https://usafacts.org/articles/which-industries-employ-the-most-immigrant-workers/). However, upcoming labor shortages are expected in sectors heavily reliant on immigrant labor, including:
– Construction
– Agriculture
– Hospitality
– Retail
– Warehousing
– Transportation
– Manufacturing
Flowers predicts these shortages could strain the labor market further: “It’s going to constrict the labor supply, and it’s going to have ripple effects.”
## Sector-by-Sector Employment Trends
Employment trends vary significantly across industries. Healthcare leads job growth, adding 52,000 jobs in February according to BLS reports. Flowers noted that healthcare is “carrying more than its fair share, more than its responsibility towards job growth, where other sectors are starting to be weaker.”
Demand remains strong for “standing-up” positions, particularly in:
– Nursing
– Construction
Meanwhile, “sitting down” roles continue showing weakness in:
– Technology
– Marketing
– Finance
**Temporary staffing** has been declining since its 2022 peak, though Flowers suggests this decline may be stabilizing. A key indicator to watch is whether employers start reducing hours for part-time workers or scaling back on staffing and temporary help jobs. “Those are the first ways employers react to uncertainty: They pause the marginal hiring before they engage in layoffs,” Flowers explained.
## Union Policy Shifts
Unionization rates continue declining, contributing to a shrinking labor share of GDP. The [Bureau of Labor Statistics](https://www.bls.gov/news.release/union2.nr0.htm) reported that union membership stands at 9.9% (14.3 million workers) in 2024, down from 20.1% in 1983.
Flowers predicts the National Labor Relations Board (NLRB) will adopt a more pro-business stance. “For anyone who works as a [talent acquisition](https://hrexecutive.com/should-hr-combine-talent-acquisition-and-talent-management-these-3-orgs-did/) recruiter in [a] union-intensive industry, the Trump administration is going to make it harder for those unions to organize,” he notes.
A paradoxical dynamic exists between the administration and unions, as union voters have increasingly shifted support toward Republican candidates. These shifts could influence workplace policies, collective bargaining strategies, and labor market conditions.
## Strategic Recommendations for HR Leaders
Flowers emphasized the importance of employer preparation for upcoming economic shifts. HR leaders must strategize for these changes, particularly the [recruiting](https://hrexecutive.com/how-data-can-support-recruiting-strategy-for-better-hiring-results/) challenges in this evolving environment.
### Key Recommendations:
– **Prepare for slower hiring** – Adjust recruitment timelines and expectations
– **Focus on strategic talent acquisition** – Target critical roles rather than volume hiring
– **Monitor sector-specific trends** – Different industries face unique challenges
– **Anticipate labor shortages** – Develop contingency plans for hard-to-fill positions
– **Adapt to reduced job mobility** – Focus on retention and internal mobility programs
## Key Takeaways for Recruiters
1. **The “Great Stay” is real** – Lower turnover means fewer open positions but potentially higher-quality candidates
2. **Healthcare remains a growth sector** – Prioritize healthcare recruiting capabilities
3. **Economic uncertainty requires flexibility** – Build adaptable recruitment strategies
4. **Demographic shifts will create shortages** – Prepare alternative sourcing strategies
5. **Union dynamics are changing** – Stay informed on labor relations developments
# Economic Policy Changes: Impact on Labor Market and Recruiting
In recent years, ongoing economic policy uncertainties have shaped [hiring trends](https://hrexecutive.com/how-to-harness-this-exciting-moment-of-change-for-ai-in-recruiting/) and changed how HR approaches talent acquisition. According to Andrew Flowers, chief economist at recruitment marketing platform [Appcast](https://www.appcast.io/), while the labor market in 2025 remains relatively stable, shifting economic forces will continue to redefine recruiting strategies and workforce planning.
## Federal Reserve’s Cautious Approach
Federal Reserve Chair Jerome Powell held a [press conference on March 19](https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20250319.pdf), highlighting the balancing act employers now face: navigating persistent inflation risks while maintaining flexibility for future adjustments.
The Federal Open Market Committee (FOMC) maintained the federal funds rate at 4.25% to 4.5%, showing a cautious stance amid economic uncertainty. Powell emphasized that the Fed isn’t rushing policy changes and will closely monitor economic data before making further decisions.
The labor market continues showing strength, with an unemployment rate of 4.1% and steady job gains in recent months, according to the [Bureau of Labor Statistics](https://www.bls.gov/news.release/pdf/empsit.pdf). Powell noted that wage growth is outpacing inflation but at a sustainable pace, and current labor conditions aren’t significantly driving inflationary pressures.
Powell described the current environment as having “remarkably high” uncertainty due to rapid policy changes in trade and fiscal policy. “It is going to be very difficult to have a precise assessment of how much of inflation is coming from tariffs and from other sources,” he stated.
## The “Great Stay” Replaces the “Great Resignation”
According to Flowers, the labor market in early 2025 shows a significant shift from the “Great Resignation” to the [“Great Stay”](https://hrexecutive.com/hunting-for-hidden-gems-in-the-era-of-the-big-stay-crms/), with job-switching rates declining and indicating greater workforce stability.
“There’s a lot less switching, and there’s a lot less churn in the labor market today than there was three years ago,” said Flowers. “So, hiring, quitting and layoff rates are all very low.”
This shift is substantial – in the year leading up to July 2022, nearly 52 million workers quit their jobs. In contrast, that number dropped to 39 million over the past year. “You’re looking at basically a million fewer workers each month quitting their jobs today than roughly three years ago,” Flowers explained.
## Changing Demographics in the Workforce
Foreign-born individuals now represent nearly one in five people working in the U.S., according to [USA Facts](https://usafacts.org/articles/which-industries-employ-the-most-immigrant-workers/). However, upcoming labor shortages are expected in sectors heavily reliant on immigrant labor, including:
– Construction
– Agriculture
– Hospitality
– Retail
– Warehousing
– Transportation
– Manufacturing
Flowers predicts these shortages could strain the labor market further: “It’s going to constrict the labor supply, and it’s going to have ripple effects.”
## Sector-by-Sector Employment Trends
Employment trends vary significantly across industries. Healthcare leads job growth, adding 52,000 jobs in February according to BLS reports. Flowers noted that healthcare is “carrying more than its fair share, more than its responsibility towards job growth, where other sectors are starting to be weaker.”
Demand remains strong for “standing-up” positions, particularly in:
– Nursing
– Construction
Meanwhile, “sitting down” roles continue showing weakness in:
– Technology
– Marketing
– Finance
**Temporary staffing** has been declining since its 2022 peak, though Flowers suggests this decline may be stabilizing. A key indicator to watch is whether employers start reducing hours for part-time workers or scaling back on staffing and temporary help jobs. “Those are the first ways employers react to uncertainty: They pause the marginal hiring before they engage in layoffs,” Flowers explained.
## Union Policy Shifts
Unionization rates continue declining, contributing to a shrinking labor share of GDP. The [Bureau of Labor Statistics](https://www.bls.gov/news.release/union2.nr0.htm) reported that union membership stands at 9.9% (14.3 million workers) in 2024, down from 20.1% in 1983.
Flowers predicts the National Labor Relations Board (NLRB) will adopt a more pro-business stance. “For anyone who works as a [talent acquisition](https://hrexecutive.com/should-hr-combine-talent-acquisition-and-talent-management-these-3-orgs-did/) recruiter in [a] union-intensive industry, the Trump administration is going to make it harder for those unions to organize,” he notes.
A paradoxical dynamic exists between the administration and unions, as union voters have increasingly shifted support toward Republican candidates. These shifts could influence workplace policies, collective bargaining strategies, and labor market conditions.
## Strategic Recommendations for HR Leaders
Flowers emphasized the importance of employer preparation for upcoming economic shifts. HR leaders must strategize for these changes, particularly the [recruiting](https://hrexecutive.com/how-data-can-support-recruiting-strategy-for-better-hiring-results/) challenges in this evolving environment.
### Key Recommendations:
– **Prepare for slower hiring** – Adjust recruitment timelines and expectations
– **Focus on strategic talent acquisition** – Target critical roles rather than volume hiring
– **Monitor sector-specific trends** – Different industries face unique challenges
– **Anticipate labor shortages** – Develop contingency plans for hard-to-fill positions
– **Adapt to reduced job mobility** – Focus on retention and internal mobility programs
## Key Takeaways for Recruiters
1. **The “Great Stay” is real** – Lower turnover means fewer open positions but potentially higher-quality candidates
2. **Healthcare remains a growth sector** – Prioritize healthcare recruiting capabilities
3. **Economic uncertainty requires flexibility** – Build adaptable recruitment strategies
4. **Demographic shifts will create shortages** – Prepare alternative sourcing strategies
5. **Union dynamics are changing** – Stay informed on labor relations developments