The ‘no hire, no fire’ era is starting to crack

Families gathering around the barbeque next Monday to celebrate the national day off from work will probably be grilling more hot dogs and cheap hamburgers than pricey T-bone steaks. The last Labor Department jobs report we’ll get before Labor Day will likely indicate that the economy is still cooling. Economists polled this week by Reuters expect Friday’s report to show that 55,000 jobs were added in August.

Even a modest prediction like that is still optimistic. The average monthly job gains over the last year have been just 34,000. Economics can be messy, but tariff policies represent one of the main causes of weak job creation and are stoking inflation. Higher prices have made consumers cut back. That has in turn made employers reluctant to hire because they have fewer customers.

Tariffs hurt in other ways too. Every week seems to bring a new headline, from renewed spats with trade partners to court rulings that further complicate the policy. Businesses need to be able to plan long-term before they are willing to hire. The volatility of US trade policy makes that extremely hard.

Employers have so far been reluctant to engage in mass layoffs. Many still recall how just a few years ago they were scrambling to fill positions and retain workers. They’d rather not go through that again. Hence the “No hire, no fire” moniker that has been slapped on the economy, though July’s report suggests that the latter part is now beginning to fade.

Last year, the softness of the job creation numbers could be explained in part by government jobs cut by the Department of Government Efficiency (DOGE). DOGE ultimately eliminated 348,000 jobs, or 11.5 percent of the federal workforce. That effort has run its course, however, and is no longer a factor in this summer’s job numbers.

Artificial intelligence is prominent in the news as well, though predictions that it will lead to widespread job losses remain unproven. It is just as likely that, while AI may be disruptive to jobs in the short term, it will ultimately create more. Companies such as Microsoft have laid off workers and redirected those savings into AI research. But corporate restructuring is not evidence of an AI jobs apocalypse. The biggest threat to the labor market continues to be policies that increase economic uncertainty and make it more difficult for businesses to plan, invest, and hire.