The employment situation in the United States continues to worsen as new layoffs mount and hiring continues to slow.
According to today’s JOLTS report from the Bureau of Labor Statistics, job openings fell to the lowest level since December of 2020, and there are now more unemployed people in the United States than there are job openings. This last occurred during March of 2021:
During July, total job openings fell to 7.18 million, slightly below the total number of unemployed persons—7.23 million—for the month. Perhaps more concerning than the gap between the two is the trend: job openings are trending downward while the total number of unemployed persons is trending upward. During July, the total number of unemployed persons hit a 46-month high.
To get a more complete picture, it is also helpful to include the total number of “discouraged workers.” These are workers who have given up searching for a job but say they would like a job. During July, these discouraged workers totaled 1.75 million, meaning the real number of unemployed persons in July was 8.98 million, rather than 7.23 million. If we look at this more complete picture of unemployment, we find that the total number of unemployed persons has been larger than the number of job openings for the past sixteen months.
All of this suggests, that as we see a widening gap between job openings and employment, we will now see the unemployment rate itself begin to increase after more than a year of hovering around 4.1 and 4.2 percent. (If marginally attached workers are included, the unemployment rate is actually more than seven percent.) On the other hand, a falling labor-force participation rate—as has been the trend since the summer of last year—could continue to give the illusion that unemployment is stable. The number of workers who now declare themselves to be not in the labor force is now quickly rising as well, further mitigating the upward trend in official unemployment counts.
However, as pointed out last month, job growth has flattened in recent months as the total number of employed persons has slowly fallen since January, and as payroll employment totals have been revised downward. The job growth we do see is largely fueled by part-time employment.
It seems that many workers have become concerned by what they see as a stagnant job market, and are holding onto what jobs they have. During July, quits in the construction sector—what is often a leading indicator of overall employment—plummeted to the lowest level seen since September 2012. We haven’t seen quits numbers so low since the years of very soft employment in the wake of the Great Recession.
This does not bode well for new potential workers entering the labor force. Remarkably, things look especially bad for recent college graduates. As shown in a recent report from the New York Fed, the unemployment rate is now significantly higher than the unemployment rate for all workers overall. This is something that has been rare historically. As of June 2025, the report shows unemployment for recent college graduates at 4.8 percent, while the rate is only 4 percent for all workers. There has been a clear upward trend in unemployment for recent college graduates since the middle of 2022.
