Hiring just hit a level not seen since the economy was ‘closed down literally’ during COVID, top economist says

Hiring just hit a level not seen since the economy was ‘closed down literally’ during COVID, top economist says

By Eva Roytburg
March 31, 2026, 2:22 PM ET

The current U.S. labor landscape reflects a startling observation: Americans are not facing widespread layoffs or resignations; rather, they are experiencing a significant downturn in hiring—a phenomenon not seen since the forced economic shutdown during the pandemic.

According to the Bureau of Labor Statistics, the hiring rate in February plummeted to 3.1%, resulting in 4.8 million hires, marking the lowest figure since April 2020. Concurrently, job openings decreased to 6.9 million, a reduction of 358,000 from January. The quit rate remained stagnant at 1.9%, while layoffs held steady at 1.1%, and retirements approached near-record lows. This trend suggests that workers are largely remaining in their current positions or in unemployment without significant movement.

Heather Long, chief economist at Navy Federal Credit Union, commented on the situation, stating, “It’s a brutal job market. To see that 3.1% hiring rate, the lowest since April 2020, when the economy was closed down literally during COVID—it just underscores how little hiring is going on.”

The stark comparison to the year 2020 adds weight to the troubling nature of this report. During that period, hiring plummeted due to physical business closures. Presently, although unemployment hovers around 4% and businesses are operational, employers are still making minimal efforts to recruit new talent.

A ‘locked-out’ market for new hires

Nicole Bachaud, a labor economist at ZipRecruiter, characterized the current environment as a “locked-out market” for prospective new hires. This situation is attributed to both stagnant hiring practices and delayed retirements that are obstructing the natural flow of talent into the workforce.

“Besides the 2020 dip, the hiring level has not been this low since 2014, a time when the labor market was still recovering from the Great Recession,” she explained. She further noted that adverse weather conditions impacted sectors such as construction and accommodation/food services, which are particularly responsive to weather patterns. February was especially harsh across the nation, featuring blizzards and blackouts.

Skanda Amarnath, executive director of Employ America, emphasized that while the severe weather and healthcare strikes account for some of the decline observed in February, there are more profound issues affecting the labor market.

“We can probably attribute 50 to 60% to just kind of the one-offs,” he elaborated. “But there’s something fundamental at play too.” He highlighted reduced immigration as a subtle yet detrimental factor impacting labor market dynamics, resulting in decreased population growth, fewer job transitions, and consequently, a decline in new hiring.

Long expressed concern for sectors like hospitality and construction, which traditionally absorb displaced workers but are currently showing signs of a slowdown.

“Most people, if they lose a job, think, okay, I could at least be a bartender or work at a restaurant. And clearly, there was a deceleration in that area,” she noted.

The impact of the war on jobs in America

The Job Openings and Labor Turnover Survey (JOLTS) data reflects conditions from February, prior to the U.S.-Israeli campaign against Iran, a conflict that has begun to affect global energy markets. With Brent crude prices exceeding $115 and the Strait of Hormuz poised to close, there is growing uncertainty regarding the sustainability of the labor market's current low-hire, low-fire equilibrium.

Bachaud warned that escalating gas prices could adversely influence transportation, manufacturing, retail, and consumer spending, potentially further constraining hiring activities in March.

Long remarked that the ongoing conflict could be the final straw for the labor market, suggesting that companies might transition from a hiring freeze to layoffs as they strive to align expenses with their budgets.

“It is not inconceivable that companies go from no hiring to starting to fire in order to make their budgets work,” she stated, underscoring that the forthcoming April jobs report may act as a significant indicator of the market's direction.

The ability of the Federal Reserve to tackle stagflation amid rising inflation remains a major concern. Amarnath highlighted that inflation rates, prior to the onset of conflict, were already running a full percentage point above the Fed’s core objectives and trending negatively.

The scheduled March jobs report, expected Friday, may shed additional light on the state of the labor market. While economists caution against drawing direct connections between JOLTS and payroll numbers, the overarching economic landscape is becoming increasingly challenging to overlook. Any signs of weak employment figures could imply that “early demand issues are back in the picture.”

Conclusion

As the Fortune 500 Innovation Forum approaches in November, it will be imperative to engage in discussions about the future trajectory of the American economy in order to navigate this complex landscape.