Federal Reserve official sounds alarm over weakening labor market
- Alexangel Ventura
- Sep 30
- 2 min read
Vice Chair Philip Jefferson, one of the biggest names from the Federal Reserve Bank of the United States, sounded the alarm of the labor market's impending doom, further raising uncertainty regarding future economic vitality.
Quantitatively, the U.S. economy has already shown signs of weakness for months. In August 2025, U.S. job openings rose to a modest 7.2 million, while hiring fell by 114,000, signaling weaker demand for workers. And the ratio of job openings to unemployed workers dipped to 0.98, showing the reducing demand for labor. In addition, confidence in alternative job opportunities has fallen, with the "quits" rate, which represents workers voluntarily leaving their job for greater opportunities, hitting an eight-month low of 1.9%. At the same time, layoff remain low, meaning that the availability of entry-level jobs like investment banking analysts plummeted in recent months. Even Americans, in survey data, showed that jobs are less "plentiful," the lowest reading since early 2021 in some measures.
Many reasons have been brought up for this shrinkage of job availability within the American economic system. The Federal Reserve argues that labor growth has slowed due to net reductions in immigration. However, other groups cited the rampant implementation of artificial intelligence, wiping out easily replaceable entry-level jobs.
In his speech, the Biden-appointed Vice Chair Philip Jefferson argued that "I view the uncertainty around my baseline outlook as especially high, mainly due to the new policies being introduced by the current U.S. administration and their effects on employment and inflation." Jefferson previously supported the 25-basis point rate cut implemented earlier this month.
New York Fed President John Williams echoed Jefferson's statements regarding economics. "Concerns over emerging weakness in the labor market were key to my support for the Fed’s recent interest rate cut," Williams argued. He also warned that the Fed must be careful not to let labor conditions deteriorate too far, while keeping inflation in control.
