While a different survey of households showed that the unemployment rate fell from 4.2% in June to 4.1% in July, this was mainly due to unemployed workers giving up their job search, which meant that they are no longer counted as unemployed. The measure of people working and unemployed, called the Labor Force Participation rate, fell to 61.4, the lowest level in 50 years, not counting April and May of 2020, when the COVID-19 pandemic was gripping the country. All in all, more than a million workers have dropped out of the labor force over the last year.

The fall in the Labor Force Participation Rate was concentrated among oppressed nationalities. The biggest drop in the LFPR was among Asian Americans, where it fell by a whole point. The LFPR among African Americans fell by 0.6, while there was no drop at all in the LFPR among white Americans.

One reason for people giving up on the job search was that for the last six months, more than one in four unemployed had been out of work for six months or more. This is a record high percentage for a time not following a severe recession such as 1981-83, 2007-2009, and 2020 when the unemployment rate topped out near or above 10%.

Job losses were led by job cuts in public schools, where almost 50,000 jobs were lost in July. While some said this was because of summer vacation, the report was adjusted to account for this. Compared to a year earlier in July of 2025, public schools still had 80,000 fewer employees. The next biggest job loss was in leisure and hospitality, which includes restaurants, hotels and entertainment. These industries lost 40,000 jobs in July.

Despite the bad economic news, the stock market rose, with all the major indices (the Dow Jones Industrial Average, the Standard & Poor’s 500, and the NASDAQ) all up for the day. Just another example of when bad news for workers becomes good news for the capitalists and rich of Wall Street.

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The biggest surprise of the jobs numbers was the loss of 55,000 jobs in hotels and restaurants. This was the biggest loss since the COVID pandemic in 2020. Many economists questioned this figure, given the tourism for the FIFA World Cup soccer games. But tourism, and thus employment in hotels and restaurants, has been declining under the Trump administration, while increasing in the rest of the world. Trump’s repeated claim to want to make Canada a U.S. state, his restrictions on travel visas, and harassment of tourists at U.S. borders and airports have made the United States a less desirable destination. U.S. hotels reported room booking during FIFA World Cup was below expectations, and some even said bookings were below usual summer rates.

An early sign of the impact of artificial intelligence or AI on jobs was the continued drop in information technology jobs. 9000 jobs were lost in this sector, marking the 17th time in the last 18 months jobs have been lost. Job losses in information technology and finance, which are almost all white-collar jobs most susceptible to AI replacement, have accelerated this year. In 2026, an average of more than 20,000 jobs were lost each month in these two industries.

While the unemployment rate ticked down in June to 4.2% from 4.3% in May, this was mainly because more than 700,000 workers dropped out of the labor force. This happens when jobless workers stop looking for work and are not counted as unemployed. Without this, the unemployment rate would have gone up in June to 4.5%.

Latino workers were hit especially hard, as their unemployment rate rose to 5.2% in June from 5.0% in May. At the same time, their labor force participation rate fell from 67.2% to 66%. If Latinos who dropped out of the labor force were counted as unemployed, their unemployment rate would have risen to 6.4%.

Wage growth for production and non-supervisory workers grew 3.4% from June last year, significantly behind the 4.4% increase in prices for the same workers as reported in June. The June inflation report will come out on July 14.

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Job growth was concentrated in the hotel and restaurant industry, which added 70,000 net new jobs in May, making up 40% of the total job growth. Next came local government (excluding school jobs), with 55,000 more jobs, as healthcare added 35,000 new jobs. Together these three industries added almost 90% of net new jobs.

One problem is that this trend is not expected to last. Traveling and going out to eat are not necessities, and with more and more households being caught in a vise as prices rise faster than wages, spending, and thus jobs, are likely to slow. Local governments are facing budget pressures as cuts in federal spending trickle down to state and local governments. Finally, the Medicaid cuts in the Republican “Big Beautiful Bill” of tax cuts for the rich and service cuts for the poor will speed up after the November elections, limiting the scope of future gains in healthcare jobs.

While the job numbers were strong, the number of long-term unemployed, who have been out of work for more than six months, rose by more than a third from a year ago. These workers now make up 27.5% of all the unemployed, as compared to only 20.4% a year ago.

Wage growth also slowed. In April, the year-over-year increase in wages was 3.6%, but in May, wages only increased by 3.4% over the previous year. The inflation rate measured by the Consumer Price Index is expected to rise to a 4.2% annual rate when the newest inflation numbers come out on Wednesday. This will widen the gap between prices rising faster, while wage growth is slowing down.

The strong job creation number combined with rising inflation caused bond prices to fall and their interest rates to rise on Friday. Since bonds pay a fixed interest payment, their price and the interest rate change in opposite directions. Bond interest rates have been rising since the being of the U.S.-Israeli war on Iran, which in turn drives up other interest rates, including mortgages to buy homes.

The drop in bond prices and higher interest rates also spooked the stock market, with the technology-heavy NASDAQ 100 index down 5% on Friday, led by chipmaker stocks, which fell 10%. The broader S&P fell half as much, or 2.5%.

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The employment report, based on a survey of businesses, was strong relative to the weak hiring in 2025, with 115,000 new jobs created. There were still pockets of weakness, with government jobs declining by 8000, making April the seventh month in a row of job losses by government workers. Manufacturing also lost jobs, down by 2000 jobs.

However, the survey of households showed more weakness, with the labor force participation rate declining by 0.1%. Without this decline, the unemployment rate would have gone up. The unemployment rate was also held down by a big jump in self-employed workers, many of whom, like rideshare drivers, are really a new type of temp workers. Last, but not least, the broadest measure of unemployment, which includes people who gave up looking for work and people working part-time who can’t find full-time jobs, rose to the highest this year, at 8.2%.

Workers’ compensation, including wages, benefits and taxes paid by the employer, rose 3.1% in the first three months of the year (January to March) according to another BLS report issued Thursday, May 7. But prices rose even faster, meaning that real compensation, or the purchasing power of workers’ wages and benefits, actually fell by one half of one percent, or 0.5%, during these same three months.

This meant that the share of total output in the economy that goes to workers was only 54.1% in the first quarter, the lowest since these records began almost 80 years ago, in 1947. With more of the share of the economy going to corporate profits, rent, interest and small business income, it is no wonder that more and more people feel that the rich are getting richer, and the poor poorer.

The growing divide between haves and have-nots can also be seen in the contrast between the latest Consumer Sentiment report by the University of Michigan and the booming stock market. The Consumer Sentiment report, which covers the period of April 21 to May 4, fell to an all-time low of 48.2. This drop reflected consumers’ expectation of inflation to rise. Expectations are that inflation will jump over the next year from 3.3% over the last 12 months to 4.5% over the next 12 months. This will further reduce the purchasing power of workers’ wages.

In contrast, the stock market, as measured by the broad S&P 500 Index, is at an all-time high. The stock market is being driven by corporate profits and the fast-growing wealth of those at the top. In particular, semiconductor chip stocks have risen to about 15% of total stock market value, even higher than during the 2000 dot-com stock market bubble.

How have sales and business profits held up with so many working-class households struggling amid soaring gasoline prices? On one hand, more and more consumer spending is based on high-income households as the economic divide in terms of income and wealth continues to grow. On the other hand, lower and middle income households, mainly the working class, are borrowing more to make ends meet. The Federal Reserve report on consumer credit, released yesterday, May 7, shows that credit card borrowing increased at the fastest rate since the last bout of inflation, in 2022.

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For all his boasting about the “world’s greatest economy,” Trump’s first year in office pales behind 2024, in the last year of the Biden administration, when more than 750,000 jobs were created, more than 60,000 a month, four times the 2025 figure. What did boom in 2025 was the stock market, with the broad index of the S&P 500 up by almost 18% that year. But half of all stocks are owned by the top 1% of billionaires and mega millionaires, while the bottom 50% of the population who have to work for a living only own 1% of all stocks.

This update on the labor market actually brings the official jobs numbers more in line with other, more negative measures of how working people are doing. Consumer sentiment surveys have cratered, the University of Michigan index going from 71.7 in January to only 52.9 in December. This reading was lower than the low numbers during the past recessions going back to 1980, when working people were hit by the “double whammy” of high inflation (the Consumer Price Index or CPI rose more than 14% that year) and high unemployment (of almost 8%). The Consumer Sentiment Index bottomed out at 51.7 that year.

The economic struggle of working people could also be seen in the rising rate of borrowers falling behind on paying their loans. The delinquency rate on household loans rose to 4.8% in the last three months of 2024, the highest since 2017. This increase was driven by more and more home buyers falling behind on their mortgages and former college students falling behind on their student loan payments. Low income and younger borrowers were hit especially hard.

Another sign of consumers feeling economic stress is the latest report on retail sales in December 2025, which came in with no change. While this report is adjusted for seasonal factors, such as seasonal holiday shopping, it is not adjusted for inflation. So flat retail sales would mean fewer, but higher priced items are being sold.

Last but not least, the corporate-owned mainstream media focused on the January 2026 jobs numbers that came out in the same report. The report was better than expected, with 130,000 net new jobs, more than twice what economists expected, and the unemployment rate dropped a bit to 4.3%. However these monthly reports are revised three times, and the changes in the January numbers have been especially large. For example, the first report on January 2025 job creation that came out in February 2025 was 143,000 net new jobs created. But the final numbers just out show a loss of 48,000 jobs, or 183,000 fewer jobs than first reported. If a similar revision were to happen in February of 2027, it would wipe out all the new jobs in January 2026 and push the report to a net loss of about 50,000.

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On October 15, a White House memo boasted a $13 billion investment in five Midwestern plants by automaker Stellantis. It also announced projects by Whirlpool, General Electric and others. Thanks to tariffs, Trump tells us, the prodigal sons of industry have returned.

But how does the scoreboard really add up for reindustrialization?

Not quite as advertised. These aren’t new factories; they’re old ones being retooled. Tariffs shoot manufacturers in the foot, since they drive up prices for supplies. Investing in new technologies takes skilled workers. This is a hard sell when ICE just deported over 300 Korean technicians from a Georgia car factory. Auto corporations, hearts full of liberal compassion, fear that “first they came for Hyundai.”

That said, there is a real attempt by both parties to “bring manufacturing back.” The truth is, this isn’t the same thing as creating jobs.

Putting America back to work?

The latest factories will be more automated than those of the past. For example, the Wall Street Journal reports that Hyundai’s latest auto plant in Georgia has a robot-to-human ratio of 2 to 1, compared to the 7 to 1 industry average. A study by the Society for Human Resource Management found that 23% of employment in direct production is mostly automated. While Trump promised booms in employment, the Bureau of Labor Statistics reported a loss of 12,000 manufacturing jobs in August alone. The Bureau predicts continued stagnation through 2034.

This trend is not new. In 1980, it took over ten hours’ labor to produce a ton of steel, and by 2018 this dropped to 90 minutes. Production levels have stayed constant, but the number of manufacturing workers has declined since 1979.

Automation not only reduces the number of jobs, it demands greater levels of education for the jobs it opens. Programming, overseeing, operating and repairing equipment often requires either college-level education or specialized training. Workers late in their careers, rural workers, or otherwise poor job-seekers are going to have a hard time accessing these skills.

Economist Robert Lawrence summarizes, “the sector should not be promoted as a vehicle of inclusive growth and employment for low-skilled workers.”

Falling rate of profit

Automation has sharpened the tendency for the rate of profit to fall. In order to undercut each other, manufacturers race to adopt the latest technologies. However, by doing so, they’re permanently raising the bar for machinery used throughout the industry (i.e. think the robot-to-human ratio discussed earlier). That means that a greater portion of their costs are constant. It’s impossible to squeeze an extra dollar out of a machine like it’s possible to exploit a human worker. The overall rates of profit can go down.

This can be seen in General Motors’ average annual operating margin, which went from 8.7% in the 1960s to negative numbers in the 2000s. Since 2008, car companies have been able to buck this trend to some extent. But this is the exception that confirms the rule: they needed help from Obama’s bailout and Biden’s subsidies. They’ve also slashed wages and relocated U.S. plants to union-busting states in the South. The 2023 strikers in the United Auto Workers know this all too well. But even in the past few years, automakers have seen their profit margins dip once again.

The race to the bottom is self-defeating. Low rates of profit make it harder to attract the finances needed to stay on the cutting edge.

Julius Krein, head of the New American Industrial Alliance, criticizes fellow capitalists for the big green dollar signs in their eyes. “During the last several decades, Americans found a way to financially engineer seemingly everything except for investments in critical techno-industrial capabilities,” he writes.

“Warning indicators are flashing red”

Because of this stagnation, more of the U.S. ruling class is ready for a heavier government hand. The prize at stake isn’t the average worker, it’s the average bottom line.

Oren Kass, chief economist at a conservative think tank, writes in Foreign Affairs: “Across the American economic dashboard, warning indicators are flashing red. The globalization and financialization of the past several decades have slowed investment, innovation, and growth. Industrial output and productivity have declined, and the United States has lost its leadership position in vital technologies – including in aerospace, energy, and semiconductors.”

It’s not just that lights are blinking on the dash, it’s also that capitalists won’t pay for a new car. “Simply put, the activities that generate the highest returns on capital are not the ones that have anything to do with building productive and innovative enterprises.”

Their solution is for the government to support gains that capital can’t achieve in the marketplace. Tariffs are one step of many. These are starting to compel manufacturers to invest in the U.S., which in turn forces companies to automate to avoid paying more workers. Industry representatives are also begging for subsidies and state-funded retraining programs. “Lead us,” the blind ask of the blind.

Salvaging jobs, or empire?

Attempts at reindustrialization have nothing to do with jobs and more to do with recovering profits. But above all else, it’s U.S. imperialism’s scramble against foreign competition.

Within U.S. borders, European and Asian automakers assemble more vehicles than the Detroit Three (Ford, General Motors, and Chrysler/Stellantis). Julius Krein complains that the U.S. is in the “middle of the pack” for overall automation levels.

China is leading the pack. The ruling class has come to admit the country’s economic superiority. “China has achieved advanced electrification with astonishing speed in part because of government support,” a recent Foreign Affairs article noted. “If the United States wants to achieve results like China, it will have to