Washington, D.C. — While today’s Bureau of Labor Statistics (BLS) jobs report shows job growth, a new analysis by the Center for American Progress reveals that, under the surface, there is still weakness in the labor market and rising underutilization that is leaving a growing number of Americans underemployed, sidelined, or struggling to connect with sustainable full-time work.
The analysis shows that every major alternative measure of labor market slack has deteriorated past pre-pandemic baselines since January 2025. Furthermore, these labor market challenges are compounding a broader squeeze on household finances. Driven by rising prices linked to the administration’s ongoing war in Iran and aggressive tariff policies, inflation-adjusted wages have fallen over the past year, meaning even steadily employed workers are actively losing financial ground.
The CAP study highlights three critical areas of concern:
- Sidelined labor force: The average share of Americans who are not in the labor force but want a job has accelerated sharply over the past year, representing nearly a million more people than the pre-pandemic average. Because they are not actively searching, they are excluded from headline (U-3) data, which sits 13.7 percent above the pre-pandemic baseline, based on May’s three-month average.
- Elevated “real unemployment” (U-6): The broadest measure of labor underutilization—U-6 unemployment, which includes involuntary part-time workers—averages 8.9 percent above its pre-pandemic level over the past three months. While slower growing than the headline rate, the May U-6 unemployment rate is 8.1 percent compared with the 7.4 percent average during 2018 to 2019 and significantly higher than May’s 4.3 percent headline unemployment rate.
- Surge in long-term unemployment: While short-term unemployment has normalized, long-term joblessness has skyrocketed. Over the past three months, the average number of workers out of work for 15 to 26 weeks sits 25.5 percent above its pre-pandemic baseline, while those unemployed for 27 weeks or more is a staggering 43.8 percent above baseline.
“While we’ve seen strong job growth for the past few months and stable unemployment, the headline unemployment numbers are understating the true extent of labor market slack,” added Sara Estep, an economist at CAP and co-author of the analysis. “Whether you look at those who have been driven out of the labor force entirely or those stuck in long-term unemployment or part-time jobs they do not desire, conditions today remain fundamentally worse than pre-pandemic norms.”
Read the analysis: “May’s Headline Jobs Numbers Mask Underlying Labor Market Slack” by Jazmine Amoako and Sara Estep
For more information or to speak with an expert, please contact Rafael Medina at [email protected].