Your labor market is bad: but you’re not alone

By Halina de Jong-Lambert, Economic Policy
Photo: Bastian Greshake Tzovaras, CC BY-SA 2.0

The numbers don’t lie: the U.S. labor market is languishing. Sifting through the revised, retracted, and re-revised labor statistics of the past few months, a dispiriting picture emerges. There was a net loss of jobs in June, for the first time since the winter of 2020. (NPR, 2025) While economists recommend that the U.S. economy needs to add between 80,000 and 100,000 jobs per month to keep up with population growth, which it has generally been able to do in the past, employers added just 73,000 jobs in July and 22,000 jobs in August. (BLS, 2025)

Gaining a clear picture has been, unfortunately, complicated by a series of historic revisions of published numbers. On August 1st, the Bureau of Labor Statistics (BLS) issued a report, unprecedented in scale, revising jobs added for May from 144,000 jobs down to 19,000, and the same numbers for June from 147,000 jobs to a paltry 14,000. (The Hill, 2025) On September 9th, the Bureau of Labor Statistics issued a stunning edit of the employment estimate for the twelve-month period ending in March 2025: they overshot the year’s numbers by 911,000 jobs. (BLS 2025)

Experts agree that recent college graduates, who are experiencing a 5.3% unemployment rate compared to the overall unemployment rate of 4%, are bearing the brutal brunt of the slowdown. When the authors of a recent report from the St. Louis Fed of Census Bureau and Labor Department wrote, “the traditional premium associated with higher education—at least for quickly landing a job—may be weakening,” they seemed to be confirming graduates’ worst fears. On the difference between the overall and college grad unemployment rates, they wrote, “this 1.34% percentage point increase represents more than just statistical noise; it reflects a significant shift in how the economy is absorbing newly educated workers.” (St. Louis Federal Reserve, 2025)

Significant media attention has been devoted to these job-hunting struggles among recent graduates, but there are daunting struggles in the non-college-grad labor market that have gone unrecognized. In a Financial Times article published in October, Columnist and Chief Data Reporter John Burn-Murdoch argued that past estimations of college graduates’ versus non-college-graduates’ employment statistics have overlooked an important distinction between the two groups. Traditionally, numbers for these two groups are compared across the same age ranges. However, a college graduate entering the workforce for the first time at 22 is significantly more exposed to hiring freezes and other labor market shocks than a 22-year-old non-college grad who has been in the workforce for 4 or more years. (Financial Times, 2025)

So, do we need to reevaluate the picture for non-college grads? Burn-Murdoch says yes. And when he reestimated the statistics accounting for different opportunities among college versus non-college grads, he found a shocking disparity. Among non-graduates, unemployment is up 2.4% in recent years, almost double the 1.2% increase for college graduates. According to Burn-Murdoch, “young people who haven’t been to university are actually having a much harder time.” (Financial Times, 2025)

New grads aren’t the only group facing a uniquely strong blow. Black women, who are disproportionately concentrated in lower-paying sectors like retail and services, often have their overall employment numbers tracked by economists and other experts as a kind of “canary in the coal mine.” They are one of the first groups to show signs of economic distress in periods of recession, and their unemployment numbers often rise first during poor labor conditions. (TIME, 2025)

During the Great Recession of 2008-2010, black women not only experienced the highest unemployment rates of any group, but they continued to experience job losses even after the economy was officially declared “recovered.” A similar pattern occurred during the recession triggered by the COVID-19 pandemic. When their unemployment statistics rose to a painful 16.6%, there was soon after a steep rise in the national unemployment rate (though that only ever peaked at 10%). (TIME, 2025)

Today, the cycle has once again repeated. Black women were the first group to experience significantly elevated unemployment rates in Summer 2025, a spike of 5.1% in March and 6.7% in August. Due to a compounding of factors stemming from racism and sexism, black women are often the first to get hit by economic crises and the last to experience relief. (TIME, 2025)

So, how bad is everyone’s labor market in context? We’ve had worse unemployment rates in the past few decades, but that may be a contributing factor to the current situation. During the Great Recession of 2007-2009, peak unemployment was a staggering 10%. The economy experienced another significant shock from the COVID-19 pandemic in 2020, which triggered an unprecedented GDP contraction and subsequently the worst unemployment rate since the Great Depression. (Howstuffworks, 2025) This is a significant amount of economic shock across a roughly 17-year period, and according to the Minneapolis Fed, these shocks have taken their toll. In a recent research article on job vacancies, they cited as a warning with their estimations that increasing instability in “labor market series,” numbers like job-quit rate, finding rate, and hiring rate, stemming from the successive recessions since 2008, have made important labor market factors like “tightness,” or slowdowns in economic growth, harder to predict. (Federal Reserve Bank of Minneapolis, 2025)

One question keeps resurging in discussions of poor labor market conditions: can we blame AI? It can be tempting to pin recent job losses on a surge in automation and AI advancements. Economists at Goldman Sachs have estimated that 6-7% of all jobs can be replaced by AI, and with the ever-growing wave of new AI assistants and better models like Google’s Gemini 5, it seems to some like the line of causality is clear. (Investopedia, 2025)

Some of the fears are justified. At least two Federal Reserve Bank surveys indicate businesses are hiring fewer people because the work is being done by AI; a survey from the Dallas Fed of businesses found 10% said AI has decreased their need for workers. There is also evidence that the impact is concentrated among recent graduates. A Stanford University study found that in the jobs most vulnerable to AI, including software developers, employment for 22 to 25-year-olds has fallen 6% since Chat GPT launched in 2022.

However, past periods of rapid technological advancement indicate that there is room for optimism. Sixty percent of today’s jobs did not exist in 1940, and researchers Dong and Briggs attribute 85% of all job creation since then to technological advancement. This is the most ideal outcome: while rendering some jobs obsolete, enough new employment possibilities are created by AI and the new world we are hurtling towards that overall employment doesn’t take too big a hit. To what extent this becomes reality, overall, remains to be seen.

For new graduates, non-graduates, and economically vulnerable groups, the labor market remains murky. But one thing is certain — you’re not alone.

References

Aspan, Maria, Scott Horsley, and Danielle Kurtzleben. 2025. “BLS Revision Shows Annual Hiring Was Overstated by 911,000 Jobs.” NPR. https://www.npr.org/2025/09/09/nx-s1-5527000/bls-us-job-growth-numbers-revised.

Cooper, Marianne. 2025. “Rising Unemployment among Black Women Is a Bad Economic Sign.” Time. https://time.com/7315624/rising-unemployment-black-women-economy/.

Cox, Jeff. 2025. “Trump Fires Commissioner of Labor Statistics after Weaker-than-Expected Jobs Figures Slam Markets.” CNBC. https://www.cnbc.com/2025/08/01/trump-erika-mcentarfer-jobs-report-fired.html?msockid=3638572f5680667d35cc431857e76725.

“Current Employment Statistics Preliminary Benchmark (National) Summary – 2025 A01 Results.” 2025. U.S. Bureau of Labor Statistics. https://www.bls.gov/news.release/prebmk.nr0.htm.

Horwich, Jeff, and Simon Mongey. 2024. “Fewer Openings, Harder to Get Hired: U.S. Labor Market Likely Softer than It Appears: Federal Reserve Bank of Minneapolis.” Federal Reserve Bank of Minneapolis. https://www.minneapolisfed.org/article/2024/fewer-openings-harder-to-get-hired-us-labor-market-likely-softer-than-it-appears.

Hyatt, Diccon. “Is Ai to Blame for the Lousy Job Market?” Investopedia. https://www.investopedia.com/ai-impact-on-jobs-numbers-11806190.

Lane, Sylvan. 2025. “Stunning Revisions Show US Added 258K Fewer Jobs than First Reported.” The Hill. https://thehill.com/business/5431805-us-job-growth-revised-downward/.

Ozkan, Serdar, and Nicholas Sullivan. 2025a. “Recent College Grads Bear Brunt of Labor Market Shifts.” Federal Reserve Bank of St. Louis. https://www.stlouisfed.org/on-the-economy/2025/aug/recent-college-grads-bear-brunt-labor-market-shifts.

Taras, Zach. 2025. “10 Worst Recessions in U.S. History, Listed Chronologically.” HowStuffWorks. https://money.howstuffworks.com/worst-recessions-in-us-history.htm#pt9.

———. 2025b. “Recent College Grads Bear Brunt of Labor Market Shifts.” Federal Reserve Bank of St. Louis. https://www.stlouisfed.org/on-the-economy/2025/aug/recent-college-grads-bear-brunt-labor-market-shifts.