Today, the U.S. Bureau of Labor Statistics released its Employment Situation report for June 2026. The labor market added 57,000 jobs, coming in well below expectations, and job growth over the prior two months was revised down by 74,000. The unemployment rate dropped slightly to 4.2 percent, but this was entirely driven by people leaving the labor force rather than moving into employment. The data also showed that job growth over the past year was concentrated in low-wage industries.
Strong headline numbers in May led some economists to take a more upbeat outlook on the labor market and even predict that it will “thaw” in 2026, yet the recent downward revisions and uneven job growth since the start of the second Trump administration suggest that labor market growth remains weak. Additionally, underlying labor market weakness—as seen in elevated underemployment and unemployment durations—along with low churn undercut the narrative that the labor market is reaccelerating, especially as workers struggle to connect with good jobs and families continue to face affordability pressures.
New analysis from the Center for American Progress, using Federal Reserve Bank of Cleveland forecasts, shows that inflation is expected to outpace nominal hourly wages in June 2026, which landed at $37.64, for the third month in a row. Additionally, since June 2025, job growth has been concentrated in industries paying below-average wages, especially health care and social services.
These factors imply that job growth is failing to put more money into the pockets of working families. At the same time, the Trump administration has attacked key avenues by which workers can ensure their wages keep up with rising prices, imposing more barriers to forming unions and taking steps to weaken the minimum wage for millions of workers in private education and health services—the fastest-growing industry. Last month, President Donald Trump claimed “it’s raining jobs,” but an economy built on strong growth almost exclusively in private education and health care, an industry with below-average wages, won’t do much to help families reeling from increasing prices.
Wage growth is failing to keep up with inflation
In early June, President Trump said “I love the inflation” as prices rose at the fastest rate in three years, wiping out nearly a year and a half of wage gains. In May 2026, nominal wage growth was outpaced by inflation as the consumer price index (CPI) rose 4.2 percent from the prior year, while hourly wages for the average private nonfarm payroll worker grew by 3.4 percent during that same time. Workers in May 2026 were earning the equivalent of average earnings in January 2025 due to elevated inflation from the Trump administration’s war in Iran and sweeping tariffs. (see Figure 1)
Inflation data for June 2026 will not be released until mid-July, but forecasts from the Federal Reserve Bank of Cleveland’s Inflation Nowcasting tool for the June 2026 CPI suggest inflation will decrease slightly from the previous month, reaching 3.92 percent year over year. In comparison, the June jobs report shows that nominal wages grew 3.5 percent from the prior year. CAP estimates that real wage growth year over year for June 2026 will continue to lag behind inflation growth, thus decreasing workers’ purchasing power.
Inflation is expected to remain elevated into the remainder of the year, meaning that gains in workers’ average hourly wages could continue to be outpaced by rising costs for essentials. Many households are feeling the strain of the Trump administration’s policies, with the average household having spent an additional $3,100 on essential goods and services since January 2025. It is no wonder that consumer sentiment remained near a historic low in June 2026 as households struggled with higher costs.
Since last year, job growth has been concentrated in the lowest-paying industries
Trump promised to be a “champion for the American worker,” but since this time last summer, high-paying industries have shrunk while job growth remains concentrated in industries that pay below-average wages.
Since June 2025, the economy added 762,400 private sector jobs in industries with average hourly earnings below the private sector average while losing 40,800 jobs in industries that pay average hourly earnings above the average. At the same time, the economy lost thousands of jobs in key blue-collar industries—with 38,000 jobs lost in manufacturing, 51,800 lost in transportation and warehousing, and 9,000 lost in mining and logging. June 2026 data even show that hiring was below average in low-wage industries that have driven the labor market growth over the past year, such as the health care and leisure and hospitality industries.
762,400
Jobs created since June 2025 in private sector industries with average hourly earnings below the private sector average
-40,800
Jobs lost since June 2025 in private sector industries with average hourly earnings above the private sector average
Both month to month and year to year, the largest driver of job growth in June was private education and health services—an industry in which the Trump administration has worked to undermine minimum wage protections despite its already below-average wages. Private education and health services added 69,000 jobs from May to June 2026, for a net increase of 648,000 jobs since June 2025, making up the bulk of private sector job growth. At the same time, the Trump administration is working to roll back minimum wage protections for up to 3.7 million domestic workers, nearly all of whom work in this sector, and historic cuts to health care in the One Big Beautiful Bill Act threaten job growth in this industry.
Conclusion
The last year of labor market data show that job growth concentrated in the lowest-paying industries will not help workers keep up with rising costs when their real wages are declining. CAP’s analysis finds that jobs added in the past year were in industries with average wages below the private sector average. At the same time, the Trump administration is attacking unions and undermining policies that successfully raise wages for workers, closing off avenues that would help families cope with high prices.
The authors would like to thank Sara Estep, David Madland, Emily Gee, and Devesh Kodnani their thoughtful review; Jiun Park for her support and fact checking of this analysis; Bill Rapp for his assistance with figure production; and Steve Bonitatibus for editorial support.