Indeed Chief Economist Explains Why Labor Market Feels ‘Frozen’ and How Employers Adapt

The labor market may feel uncertain, but the data tells a clear story: Hiring is sluggish, labor shortages are looming, and employers that use real-time insights can adapt faster and stay competitive.

Employers and job seekers have endless questions about today’s labor market: Are we in a recession? Is a labor shortage coming? What about the impact of AI on jobs?

Few people are better equipped to answer those questions than Svenja Gudell, Indeed’s chief economist.

By analyzing Indeed’s trove of millions of job postings and billions of annual job searches, Gudell can see past today’s chaotic headlines — not just into where the hiring market stands now, but where it’s going.

The good news? “We’re not yet in a recession,” Gudell said during her remarks at the Indeed FutureWorks 2025 conference. The bad: Warning signs are all around us. Gudell leaned on Indeed data to answer some of the most pressing questions about today’s labor market and offer tips for how employers can respond.

Are we in a recession?

Not quite. The labor market has cooled considerably, but unemployment currently stands at 4.3% and layoffs are low. “That’s really some good news,” Gudell said.

But there are signs of trouble: Inflation is beginning to outpace wage growth, hiring rates are stuck at roughly 2013 levels, and the ratio of job openings to unemployed workers has steadily decreased from 2:1 to 1:1, drastically limiting job seekers’ options.

That means it takes job seekers four weeks longer, on average, to find a new job than it did two years ago, Gudell said.

This is partially because quit rates are down, meaning people are holding on to their jobs longer, reducing the churn that happens in healthy markets.

While it might not be a recession, Gudell said, “We like to call this a frozen labor market.”

Are labor shortages on the horizon?

In short, yes. “Talent shortages are coming, and they’re coming soon,” Gudell said.

Baby boomers are aging into retirement, she noted, and younger generations are smaller, meaning they won’t be able to match the labor force participation of older generations. Gudell predicts tangible impacts on the labor market as soon as 2027.

“This is a very huge problem that we’re going to see,” Gudell said.

Can AI fill the gaps?

It’s complicated. AI job postings still represent less than 3% of all jobs on Indeed. That’s more than last year, but widespread adoption of AI in job roles is still in its early days.

Indeed data shows that 95% of employers have no AI job postings at all. In fact, just 1% of companies account for 90% of AI-related postings.

That doesn’t mean AI isn’t having any impact on hiring. Indeed Hiring Lab recently analyzed nearly 3,000 skills to assess their exposure to AI. The result? While there weren’t any jobs that are fully replaceable by AI just yet, Gudell said, “There’s not a single job that doesn’t have some sort of impact from AI.”

In the tech industry in particular, Gudell noted, Indeed is beginning to see more postings for senior roles than junior roles. “As AI is able to take over some routine tasks, like basic coding, hiring a more junior person is not as top of mind as it used to be,” Gudell said.

What now?

Gudell offered some pointers to help employers adapt to this uncertain and tumultuous market:

Data is your compass. Indeed’s Hiring Lab data can help talent acquisition leaders benchmark, forecast and optimize their hiring based on real-time labor market trends.

Flexibility wins: Be prepared to challenge your “hiring playbook” and evolve with the market.

Use AI as an opportunity multiplier: Focus on building teams that can use and supervise AI effectively — not to replace employees, but to augment them.

Indeed provides this information as a courtesy to users of this site. Please note that we are not your recruiting or legal advisor, we are not responsible for the content of your job descriptions, and none of the information provided herein guarantees performance.

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This post was created by Indeed with Insider Studios.