August Jobs Report: Slowing Job Growth and Rising Disparities Signal Growing Concerns for the Economy

By Bernard E. Anderson, Ph.D.
Whitney M. Young, Jr. Professor Emeritus, The Wharton School, University of Pennsylvania
Senior Economic Advisor, National Urban League

The August employment report paints a picture of an economy that continues to grow, but at a slower and more uneven pace. According to the Bureau of Labor Statistics, total employment rose by just 22,000 jobs in July, a sharp decline from earlier months and a clear sign that the labor market is losing steam. The unemployment rate increased to 4.3 percent, up one-tenth of a percentage point from July, marking the highest level this year.

Private sector employment increased by 38,000, but government jobs, particularly in federal agencies, declined by 16,000 as part of a broader downsizing effort. The largest job gains came from health care, which added 31,000 positions. Manufacturing employment fell by 12,000, reflecting the higher input costs triggered by import tariffs. Construction lost 7,000 jobs, and retail trade and professional services also posted job losses. Leisure and hospitality employment fell by 28,000, a discouraging shift in a sector that has previously supported steady gains.

The overall tone of the report reflects a weakening labor market. While consumer spending and business investment continue to prop up economic growth, the slowing pace of job creation is likely to influence future policy decisions. There is increasing speculation that the Federal Reserve may respond by reducing the federal funds rate by 25 basis points at its next meeting, particularly as inflation remains above the Fed’s 2 percent target and long-term unemployment now accounts for over a quarter of all unemployed persons.

The demographic data in this month’s report reveals renewed concerns about equity and inclusion. Black employment declined by 7,000, and the Black unemployment rate rose to 7.5 percent. Employment for white workers fell more steeply, down 283,000, but their unemployment rate held at 3.7 percent. The Black–white unemployment ratio returned to a troubling 2-to-1 level, reversing recent progress and highlighting the enduring structural inequalities in the labor market. Increased unemployment among Black women contributed significantly to the widening disparity. Hispanic employment also declined, falling by 15,000, with an unemployment rate of 5.3 percent.

These disparities cannot be explained solely by market forces. They raise questions about the depth of employer commitment to equitable hiring practices and the broader implications of federal economic policies. Structural inequality remains a persistent and unresolved challenge.

Wage growth continued modestly, with average hourly earnings rising 0.3 percent in July and 3.7 percent over the past year. The employment-to-population ratio held steady at 59.6 percent, while the labor force participation rate inched up to 62.3 percent. The broader U-6 measure of labor underutilization, which includes discouraged workers and part-time employees who want full-time work, declined to 8.1 percent.

The economic outlook remains uncertain and is heavily influenced by ongoing policy instability. Tariffs continue to add to inflationary pressure, and the Trump administration’s erratic economic strategy has made forecasting increasingly difficult. The president’s restrictive immigration policies have stalled labor force growth, limiting the supply of workers in industries like agriculture, construction, hospitality, and health care. With fewer immigrants entering the workforce, labor shortages have become more acute, particularly in lower-wage sectors.

Communities are also facing pressure from the dramatic reversal of immigration trends. The surge in undocumented immigration during the previous administration has been replaced by strict enforcement actions, which have increased labor costs and reduced productivity in many sectors. Job openings now roughly match the number of people seeking employment, a far cry from the labor shortages of recent years.

The president’s actions are also testing the limits of democratic governance and institutional integrity. Reports that the President dismissed the BLS Commissioner due to dissatisfaction with recent jobs reports, and that he attempted to remove Dr. Lisa Cook from the Federal Reserve Board, have sparked concern across the economic community. Dr. Cook’s refusal to resign and her legal challenge represent a key defense of the Federal Reserve’s independence, which the U.S. Supreme Court reaffirmed in a recent decision.

The economy is still expanding, but the forces sustaining it are under stress. Inflation remains elevated, labor force growth is stalling, and the burden of policy missteps is falling disproportionately on marginalized communities. The August report confirms that we are in a period of slowing but continued growth, what some may describe as “plugging along.” But this pace is fragile and vulnerable to shocks.

To protect the recovery and promote long-term resilience, policymakers must refocus on stability, equity, and investment in human capital. A just and inclusive economy cannot thrive under spastic policy swings or hollowed-out institutions. It requires leadership grounded in fairness, foresight, and commitment to economic justice for all.