“The Forever Tight Labor Market”. Why the Labor Market Climate Is More Important Than The Hiring Weather

By: Jerry Rubin

If you only follow the headlines: “AI means no new hiring”; “Recent college grads struggling to find jobs”; you might think that we were in a recession. But you would be making the same mistake that businesses and the business press consistently make, focusing almost exclusively on the hiring weather: or labor market demand and hiring ups and downs, rather than on labor market supply, which is in a steady inexorable decline.

Certainly hiring always fluctuates in response to business conditions, and is flat or down in some industries, but 5.2 million hires are made every month across the country, and many industries, particularly those affected by immigration constraints, are desperate to find and keep talent. The supply side of the equation is another story altogether.

The projected rate of labor force growth, 2024 to 2034 is 0.4 percent, an historic low, down from 2.6 percent in the 1970s. This dramatic fall in labor supply is driven by several factors. Population growth is at a historic low of 0.4 percent, down from 1.3 percent in the 1960’s. Workforce participation is now below 62 percent and projected to be 61 percent by 2034, down from 67.3 percent in the early 2000’s. And, immigration, which drove job growth over the past decade is now reversing, with the labor market losing over one million immigrants in the past year. Welcome to the “forever tight labor market”.

Employers who wait around for the ideal candidates to walk in their door, or AI or the next recession to reduce their labor demand will likely find themselves struggling to find and keep talent the minute demand for their products or services ticks up. Rather than sitting on their hands, they might consider a employee-centered strategic approach to talent that can create and sustain a pipeline of productive employees.

Such a strategy involves changing how and whom they hire; re-designing jobs to improve job quality and in turn retention; expanding government relations to actively support policies that will expand the potential workforce; and partnering with education, community, and other organizations that have unique access to un-tapped talent pools. If they do they will be rewarded with consistent productivity and profitability and be well positioned to outpace their competitors.

Jerry Rubin and Steven L. Dawson are co-authors of “Help Wanted: How To Find And Keep Talent In A Forever Tight Labor Market” MIT Press, August 2026.