July Jobs Report Reveals a Labor Market on Life Support
July Jobs Report Reveals a Labor Market on Life Support
Economy lost 23k jobs; Labor force participation drops to lowest level in five years
Today’s jobs report shows the labor market lost 23,000 jobs in July, while May and June job growth was revised down by a combined 103,000 jobs. The unemployment rate fell to 4.1%, but only because 264,000 people stopped looking for work altogether — the third time this year a large wave of people left the labor force. The labor force participation rate stands at 61.4%, its lowest level in five years.
Groundwork Collaborative’s Chief Economist, Breyon Williams, released the following statement:
“Today’s report shows a patchwork economy that is fraying at the seams. Employers cut 23,000 jobs last month and gains in the spring were revised away — revealing a labor market that is propped up by health care, which accounts for the bulk of all job growth this year.
“Trump’s economic mismanagement has injected so much uncertainty into the economy that employers are not confident enough to add more people, but also have not initiated massive layoffs, creating a frozen job market where those with jobs are afraid to leave them and those without are stuck on the sidelines. But regardless of having a job or not, everyone is paying high prices from Trump’s chaotic tariffs and war with Iran.”
BACKGROUND
Outside of health care, job growth has stalled.
- Health care added 22,600 jobs in July, even as the rest of the economy lost more than 45,000 jobs. Healthcare accounts for 76% of all gains so far this year. The concern is not that health care is hiring, but that the economy is not hiring more broadly. Health care hiring follows demographics and illness rather than the business cycle, so the sector can grow even when the rest of the economy has stalled.
- Job gains outside of health care were limited. Retail lost 19,000 jobs, leisure and hospitality lost 40,000, and American manufacturing is still waiting on the renaissance that Trump promised – factories added only 5,000 jobs in July and have shed 62,000 jobs since Trump took office.
Trump’s frozen job market has fueled long-term unemployment.
- The job market remains stuck in a hiring freeze. The hiring rate held at 3.4% in June, well below its pre-pandemic pace. In the face of sustained chaos and uncertainty brought on by Trump’s economic mismanagement, employers are holding on to their existing workforce and hiring little, so workers who lose their job have few opportunities.
- Long-term unemployment is on the rise. More than one in four unemployed workers (25.5%) have now been searching for work for at least six months, up from 24.9% a year ago.
The labor market is leaving millions of workers behind.
- The limited job opportunities disproportionately affect Black workers. The unemployment rate for Black workers stood at 6.3%, well above the overall rate of 4.1%, representing roughly 1.4 million Black workers out of a job who want one.
- Trump’s economy has ushered in one of the toughest entry-level markets in years. The unemployment rate among workers ages 20 to 24 stood at 7.1%, more than 1.7 times the overall rate, representing 1.1 million young workers out of a job who want one.
- Many workers want but have yet to find stable full-time employment. The broader U-6 unemployment rate, which includes discouraged workers and those stuck in part-time jobs because they cannot find full-time work, stood at 7.9%, nearly double the overall rate and representing roughly 14 million workers.
Workers’ paychecks are still losing ground to higher prices in Trump’s economy.
- More workers’ earnings are being eaten by prices. Average hourly earnings rose 3.2% over the past year, falling behind rising prices, which the most recent inflation report shows climbed 3.5%.
