Frozen job market continues with an estimated 27,000 new jobs added
On August 7th, the Bureau of Labor Statistics released its employment report (BLS). The report showed negative job growth, -23,000 jobs lost, for the first time since December 2025. The job numbers for May and June were revised downward. The job losses can be traced to the -50,000 (-50K) drop in local education employment. States end their school years later, so the job losses show up in July rather than June. The real job creation numbers should be about 27,000 new jobs. Still a historically small number.
To save time, “K” will indicate 1,000 going forward in our reporting.
The July report is another bad report for workers over the long term. Workers continue to face a “frozen” job market and stagnant wages. Large numbers of people are leaving the labor market.
There are two trends to keep an eye on: one is increased corporate power over hiring (Monopsony). When businesses can drive down wages, they can increase profits. In the report, wages stayed flat at $37.49 after increasing for 6 months. A trend to watch.
Second is the AI effect. Corporations are using AI as a cudgel to limit hiring and drive down wages in many knowledge-based industries like finance, insurance, legal services, and IT.
The job report
1. A negative job creation number is a bad sign. Creating only 27K after correction used to signal a recession. Now it’s business as usual.
2. The report also revised the prior-month employment numbers. May and June worker numbers were both reduced by a total of -103,000 jobs. May was down -66K and June decreased by -37K.
3. Wages were flat for the first time since December 2025. Inflation held steady at 3.6%. You have to go back to COVID to find negative wage growth numbers. The Atlanta Fed has a great site tracking wage growth (Atlanta Fed).
4. Separately, people continue to drop out of the labor force. A quarter million people left the labor force (-264K) in July and a total of 1.3 million since last year. The labor participation rate fell by -0.1% as did the employment-to-population ratio (-0.1%). Surprisingly, an additional 2.8 million people said they were not in the labor force when compared to last year.
5. Sector-level employment dropped in hospitality (-40,000 positions) and local government education (-50K), but rose in construction(22K). Healthcare, one of the best indicators of the labor economy, was lower than usual, adding only 22K jobs. Healthcare has averaged 50k new jobs per month over the past year.
6. Jobs in AI-vulnerable industries were mixed: Finance lost -14K workers, but Business Services added 18K positions. Finance is down -121,000 jobs since May of 2025.
Long-term trends to keep an eye on
Employment duration
Hospitality, healthcare, finance and IT
Summary
Another slow job growth report while corporate profits continue apace and the current administration ignores workers. Sadly, on a recession may get their attention.