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Here’s What You Need to Know About the Labor Market
A weak July jobs report and massive downward revisions show it is getting harder to find a job – and the ones available exist in only a couple of sectors.
By Tim Smart
Source: U.S. News
Jeffrey Greenberg|Universal Images Group|Getty Images
A Walmart employee stocks produce in Miami, Florida.
The recent jobs report from the Labor Department painted a far less rosy picture of the labor market in July than analysts had expected.
In addition to coming up short of the forecast of 100,000 jobs being added to payrolls, the 73,000 increase was highly concentrated in just two sectors: health care and social assistance. Manufacturing and professional and business services actually shed jobs.
Perhaps the most ominous part was a downward revision of the jobs numbers for May and June. Instead of the 291,000 new jobs originally estimated, the government said only 33,000 were created during that two-month period.
The dour report prompted President Donald Trump to fire Erika McEntarfer, claiming without evidence that the head of the Bureau of Labor Statistics had “rigged” the numbers.
Politics aside, the deceleration in the job market (and perhaps a sign the economy is rapidly slowing) had been something that analysts believed might happen.
“The U.S. labor market may be entering rare and troubling territory, defined by a shrinking labor force and cooling hiring demand,” said Sam Kuhn, economist at Appcast, a recruitment technology firm. “Restrictive immigration policies are constraining labor supply, while rising tariffs and economic uncertainty may cause employers to scale back hiring plans.”
Jobseekers Face an Uncertain Labor Market
Jobseekers can expect a longer time before you find a job. Industries that have a large number of openings include retail and state and local government. Industries where job openings have declined include accommodation and food services, as well as finance.
“If your skills align with healthcare, education, or state and local government, it may be easier – which is not the same as easy – to still find opportunities in this job market,” says Laura Ullrich, director of economic research for North America at the Indeed Hiring Lab. “However, if your skills align more closely with manufacturing, financial activities, or trade and transportation, the reality may feel quite different.”
Who Is Getting Jobs?
While there were 212,000 fewer adult males employed in July, women of the same age had a slight gain of 21,000 jobs. That gap likely will widen as the growth in employment is concentrated in fields such as health care and social assistance, where women make up more than 75% of the workforce.
The cutbacks in immigration that began in the latter stages of the Biden administration but have accelerated with President Donald Trump’s mass deportation program have resulted in more than 1 million fewer foreign-born workers in the labor force.
“Immigration policy is impacting the workforce: the labor force declined for the third month in a row – for the first time since 2011,” said Appcast’s Kuhn. “Since April, the total civilian labor force has declined by 793,000, a drop rivaling the workforce decline seen during the Great Recession in the late 2000s.”
The Outlook for Recent Graduates Is Weak
Historically, having a college degree has paid off for jobseekers. While that may still be true, the advantage is not what it was. A year ago, the unemployment rate for those with at least a bachelor’s degree was 2.3%. Now, it is 2.7%. That is the highest since August 2021. Another measure, taking the percentage of employment as a share of the population, shows the percentage of those with college degrees who are employed has fallen to its lowest level since March, 2021.
“If you’re young and just entering the labor force or you’re older and seeking to reenter it, prospects may seem bleak,” said Adam Schickling, senior economist at mutual fund giant Vanguard. “The number of unemployed in these two categories has been rising, as it did during the global financial crisis and the COVID-19 pandemic.”
The Number of Long-Term Unemployed Is Growing
One metric that labor analysts watch closely is the number of people who have been out of work for more than 27 weeks. That number has been growing and increased by 179,000 people in July, bringing the total to 1.8 million that month. The long-term unemployed now account for roughly 1 in 4 people looking for a job
It’s Not All Doom and Gloom
At 4.2%, the unemployment rate is still low by historical standards. Layoffs remain low and concentrated in a few industries. Wages have been rising at a 3.9% rate compared to a year ago. With stated inflation at 2.7%, you are still ahead of the game.
Source: https://money.usnews.com/money/personal-finance/articles/heres-what-you-need-to-know-about-the-labor-market