Americans Becoming More Concerned About Job Loss and Ability to Pay Off Debt

Job seekers look over job opening fliers at a WorkSource exhibit. (David McNew/Getty Images)

The fear among Americans about losing their jobs and being unable to pay their bills is at the highest level in years.

Results of the latest Survey of Consumer Expectations, released on April 8 by the Federal Reserve Bank of New York’s Center for Microeconomic Data, show that concern among Americans about losing their jobs is at the highest level it has been since September 2020. Their worry about being unable to make the minimum payments on their debts is also at its highest point since the onset of the COVID-19 pandemic.

The perceived probability among Americans of the likelihood of finding a job decreased to 51.2 percent in March from 52.5 percent in February. That’s the lowest reading in almost three years.

These sentiments correspond with the findings of other recent surveys.

A survey conducted by Morning Consult a year ago shows that 75 percent of Americans were concerned about widespread job losses. While 49 percent were worried about job losses in their industry, 39 percent were afraid of losing their own jobs.

A survey conducted by MyPerfectResume in October 2023 shows that 85 percent of the participants feared losing their jobs in 2024 and that 69 percent said they believe competition to land a new job will get tougher.

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Economists participating in the first-quarter 2024 Bankrate Economic Indicator Survey predict that the unemployment rate will rise to roughly 4.2 percent by March 2025. While the job market has exceeded expectations for five straight quarters, they also predict that employers will scale back on hiring.

Between now and March 2025, economists expect the rate of job growth to average about 117,000 jobs per month—half the growth seen in the previous 12 months.

Among the 17 economists participating in the survey was Sean Snaith, director of the Institute for Economic Forecasting at the College of Business at the University of Central Florida.

In an interview with The Epoch Times, Mr. Snaith suggested that a softening of the labor market is likely to occur as we move through the next three quarters of 2024.

“I don’t think this is going to be a dramatic change in the labor market in terms of a large increase in unemployment or widespread layoffs. But I do think hiring will slow to a crawl, and I think we will see the unemployment rate tripped up over the course of the year,” he said.

Job Loss

Despite the sentiments expressed by the respondents in the Survey of Consumer Expectations, Mr. Snaith said the national labor market is very strong.

“There’s very low unemployment, and payroll job growth is still surprisingly strong,” he noted.

However, while the recent job numbers “look shiny from a distance,” Mr. Snaith said, “there’s a little bit of tarnish.”

The latest jobs report, released on April 5 by the Bureau of Labor Statistics (BLS), shows that the unemployment rate held steady at 3.8 percent and that nonfarm payroll rose by 303,000.

But a closer examination of the numbers shows that the second greatest source of those job gains (71,000) came from people being hired by either local (plus 49,000) or federal government agencies (plus 9,000) for an average monthly gain of 54,000 over the previous year.

The employment numbers also include people who are working more than one job.

In January, nearly 8.3 million people held multiple jobs to make ends meet, according to data from the Labor Department. That number rose to almost 8.5 million in March. Those multiple-job workers represent 5.2 percent of the workforce, the largest number since just before the COVID-19 lockdowns in January 2020.

People holding two full-time jobs in March numbered 380,000. More than 5 million people held one full-time and one part-time job, and more than 2 million people held two part-time jobs.

“The labor market is a complex thing, and one or two data points don’t really capture what’s happening,” he explained.

While wages have gone up significantly, Mr. Snaith also acknowledged that the higher wages are causing some employers to lay off workers and replace them with kiosks and automation—adding to the growing fear among Americans about losing their jobs.

For example, California raised the minimum wage for fast-food workers to $20 per hour. As a result, thousands of fast-food workers—particularly from pizzerias—are losing their jobs or having their hours reduced as employers struggle to offset the forced increase in payroll.

Uncontrolled Debt

The fear among Americans right now about their inability to meet their debt payments is caused by the escalating cost of living and equally high interest rates.

The latest jobs report shows that the average hourly earnings in the private sector rose by only 12 cents (0.3 percent) in March and by 4.1 percent over the past year.

However, the increase in wages and salaries has barely kept up with the cost of living.

The latest data from the BLS show that the consumer price index rose by another 0.4 percent in March for an increase of 3.5 percent over the past 12 months.

“That has put households in a more precarious situation financially and evidence of that is the steep increase in credit card balances,” Mr. Snaith said. “That’s indicative of households that pay their rent, utilities, and car payments and get to the end of the month and still have bills to pay or purchases to make but the paycheck is gone. So they turn to credit card financing.”

In the fourth quarter of 2023, total household debt rose by $212 billion to reach a total of $17.5 trillion, according to data released by the Federal Reserve. Credit card balances grew by $50 billion to $1.13 trillion, mortgage balances increased by $112 billion to $12.25 trillion, and auto loan balances increased by $12 billion to $1.61 trillion.

Aggregate delinquency rates for all types of debt—except for student loans—increased in the fourth quarter of 2023, with 3.1 percent of outstanding debt held by Americans sitting at some stage of delinquency. Annualized, about 8.5 percent of credit card balances and 7.7 percent of auto loans transitioned into delinquency, and serious credit card delinquencies surpassed pre-pandemic levels among all age groups, particularly among younger borrowers.

Not only have the balances gone up significantly but the interest rates on credit cards have also soared. The average interest rate for credit cards as of April 12 is 27.89 percent, according to Forbes Advisor’s weekly credit card rates report.

“You take a big balance and an interest rate of 21 percent, and that monthly payment has become significantly larger,” Mr. Snaith explained. “That’s a real source of duress for consumers and a potential Achilles heel for the economy. If we see a further increase in interest rates that is something that could tilt the economy into recession.”