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AIPROPX ReportCNBC · 5h ago
Why people are dropping out of the workforce and not looking for new jobs: 'The market wore me down
After six months of scouring job listings and sending off resumes, Dan Coda's job search came to an end. He didn't find the technical program or project management job he wanted; he just stopped looking altogether.
Starting around December 2025, when he was laid off from his previous role, Coda says he spent more than 300 hours job hunting, submitting dozens of applications, hearing back about 15 potential roles and going through multiple rounds of interviews to no avail. By June, Coda says he was done with the grueling effort of looking for work.
"The market wore me down," the 40-year-old from Durham, North Carolina, tells CNBC Make It. "I was hitting wall after wall after wall and not getting anywhere."
This year, the number of announced layoffs in January reached a level not seen since 2009, during the Great Recession, according to data from global outplacement firm Challenger, Gray & Christmas. "The candidate pool is absolutely flooded," Coda says, citing mass layoffs pushing thousands of affected workers like himself into the job market at once. With that kind of competition, he says, "What chance do you stand?"
Discouraged job seekers like Coda, who have given up on finding work, at least for now, are part of a trend economists say is worrying: The labor force participation rate has been on a downward trajectory since the turn of the millennium, fueled by an aging population and fewer young people entering the workforce.
June saw the biggest one-month drop in prime age labor force participation of workers ages 25 to 54, excluding the Covid-19 pandemic, since June 1976. Roughly 720,000 people stopped working or looking for work between May and June, according to the St. Louis Fed. Those leaving the workforce are both men and women, and the majority are ages 25 to 34, says Heather Long, chief economist at Navy Federal Credit Union who specializes in the economics of the middle class.
Meanwhile, elevated levels of long-term unemployment persist. In June, more than 1.9 million Americans, or roughly 1 in 4 unemployed people, were jobless but still looking for work for longer than six months , according to U.S. Bureau of Labor Statistics data. A continuous low-hire, low-fire job market could make it more challenging to find work and push more people out of the workforce altogether.
Official numbers on how many people are dropping out of the workforce are likely to be revised downward in the coming months, Long says, noting that the one-month spike indicates "something wasn't quite right" in the initial data pull. But falling labor force participation nonetheless adds to a picture of an American labor economy seemingly out of balance with few solutions in sight.
And the factors pushing people out of the labor force have implications beyond workers paying for everyday essentials, including stunting career trajectories and impacting long-term retirement savings.
Economists say several compounding factors are likely driving down the labor force participation rate, like an exodus of retiring workers and lower immigration into the U.S. Some working parents, especially moms of young kids , and people with disabilities may be striking out as they face more competition for remote or flexible work opportunities that are harder to come by today, Long says.
Mental wellbeing could also play a part. Coda says he stopped his job search in June after a conversation with his wife, who'd noticed how the tiresome process soured his mood.
"Other than the death of a family member or a close friend, [unemployment] is one of the most devastating things that people face," Carl Van Horn, director of the Heldrich Center for Workforce Development at Rutgers University, told CNBC in June.
About half of job seekers say the search negatively impacts their mental health due to rejection, lack of responses, financial pressure and waning motivation, according to an April Resume Genius survey of 1,000 active U.S. job seekers.
Meanwhile, employers also tend to question resume gaps , which can make it harder for candidates to find work the longer they're searching.
Coda says his mental health during his job search, while dispiriting, was less affected by the tepid responses because his family had been saving aggressively. He and his wife, who still works full-time in HR, had been working toward an early retirement. And though they're now dipping into those savings, Coda says the family can better afford his hiatus as they're scaling back on dining out, yard maintenance and housecleaning services.
Others are less lucky. Haina, who like some other people from Inner Mongolia in China has only one name, says she's relying on family after an exhausting job search strained her mental health.
The 33-year-old was living in New York when she was laid off from her marketing analytics role in November 2025. Over the next few months, she set up interviews and even secured a few offers, but she says finding a new employer to accommodate her H-1B visa needs has been difficult. (Employers often have to apply on behalf of employees for visa transfers costing thousands of dollars between filing, processing and attorney fees.)
In May, Haina stopped her U.S.-based job search and headed home to Inner Mongolia to stay with family. Since then, she says she feels more like herself again. The job search was a "roller coaster of ups and downs," Haina says: "If you met me a month ago, I was a completely different person. I didn't have energy."
Haina is currently staying with her parents, which means she has minimal expenses, and says she relishes being home for the first extended period of time since she left for the U.S. eight years ago.
"I just want to really take this [moment] to spend time with my family and really think about what I want to do," she says.
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