Policy Shocks and Uncertainty Are Redefining the Talent Market

Labor market watcher Andrew Flowers delivered a sobering message for HR leaders at the Unleash America conference on March 18 in Las Vegas: the labor market is becoming more complex, constrained, and uncertain.

“The world is changing rapidly. Lots of uncertainty,” said Flowers, chief economist at Appcast, pointing to a mix of economic and geopolitical forces — from tariffs and inflation to the war in Iran — that are reshaping workforce planning and hiring conditions.

A useful way to understand today’s labor market, Flowers explained, is by looking at the ratio of unemployed workers to job openings. “Right now, for every 100 unemployed people looking for work, there are only 94 job openings,” he said. That’s a dramatic shift from just two years ago, when there were roughly two openings for every unemployed worker.

Still, context matters. “Are we in a recessionary environment? No,” Flowers noted, pointing to the recessionary 2008-2010 period, when unemployment was much higher than it is today.

Instead, the market is cooling in a more subtle way. “The U.S. jobs market is slowing. Not because of layoffs. Because of a lack of hiring,” he said. This has created what he called the “opposite of the Great Resignation — what I call the Great Stay. It’s a frozen job market.”

For HR leaders, this stagnation presents a different kind of challenge. Fewer employees are leaving their jobs, which means fewer candidates are looking for new opportunities, making it harder to attract talent.

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Another key dynamic is sector concentration. “In 2025, 95% of new net jobs can be attributed to health care,” Flowers said, underscoring how dependent overall job growth has become on a single industry. At the same time, broader economic fundamentals remain relatively steady, with GDP growth hovering around 3% through most of 2025 before softening slightly.

Looking ahead, Flowers outlined both tailwinds and headwinds for 2026. On the positive side: “a huge AI investment boom, lower interest rates, and tax cuts.” But the risks are significant, including “immigration, tariffs, the negatives of the Trump tax bill, and the largest oil shock in history due to the war in Iran.” He noted that crude prices have effectively risen 30%, pushing up gasoline costs. “If this persists for months, countries around the globe will likely head into a recession.”

Policy decisions are playing an outsized role in shaping the talent landscape. Tariffs, for example, represent “an incredible shift in the world economy” since their expansion in April 2025. “Tariffs are a tax on imports,” Flowers said, adding that “about 80% of tariffs are passed onto consumers as higher prices.” Beyond inflation, the bigger issue may be hesitation. “Companies are just waiting to see what will happen before moving on investment and hiring plans. Consumers are also waiting,” he said.

Immigration policy is also tightening the labor supply. “One in five people in the U.S. labor force are foreign born,” Flowers said, the highest share since the 1890s. But recent changes have reduced that pipeline. “The bottom line is that immigration policy changes have led to a roughly 600,000 to 800,000 reduction in the U.S. labor force,” he said, with ripple effects across industries and geographies.

Taken together, these forces are putting upward pressure on wages and candidate expectations. “Tariffs and immigration policies are squeezing the talent supply and raising wage expectations,” Flowers said.