Long-Term Unemployment Rises In Worrying Sign For U.S. Labor Market.

U.S. job growth is slowing, long-term unemployment has surged to its highest since 2021, and policy uncertainty, demographic gaps, and shrinking labor force participation point to deeper economic cracks.

The subtle and not-so-subtle signs of a weakening U.S. labor market, focusing on the recent rise in long-term unemployment, what it means for different groups of Americans, and how economic policy and industry shifts are stirring the job scene. Drawing on recent BLS data, economic expert opinion, and signals missed by headline stats, it unpacks the messy reality of a softening recovery.

Here’s something they don’t tell you in textbooks: sometimes the health of the job market isn’t just about the number flashing on TV screens. Back in 2009, right after the Great Recession, I remember my neighbor Sam counting the days until his unemployment checks ran out, an experience more common than anyone cared to admit. Fast forward to July 2025, and familiar warning signs are cropping up again—except this time, they’re a little sneakier, hiding behind slightly ticked-up unemployment rates and those quietly rising long-term jobless numbers. Is history repeating itself, or is the game changing? Let’s dig in.

Beyond the Headlines: Where the Real Labor Market Drama Unfolds

On the surface, the unemployment rate for July 2025 looks steady at 4.2%, matching the levels seen since May. But a closer look at the latest Bureau of Labor Statistics report reveals a much more complicated story—one where the real drama of the U.S. labor market is playing out far from the headlines.

While the headline numbers suggest stability, pain points are lurking just below. The most worrying sign? A sharp jump in long-term unemployment. In July, the number of Americans out of work for six months or more rose from 1.6 million to 1.8 million. That’s 24% of all unemployed people—the highest share since February 2022, when the country was still clawing its way out of the pandemic slump. It’s also the largest number of long-term unemployed since late 2021.

What’s behind these numbers? The labor force actually shrank a bit in July, meaning fewer people are even looking for work. This helps keep the unemployment rate from rising, even as the number of employed workers drops. The Bureau of Labor Statistics also revised previous months’ job gains downward, signaling that the job market has been weaker than first reported.

For those stuck in long-term unemployment, the struggle is real—and it gets harder the longer you’re out. Valerie Wilson, a labor economist at the Economic Policy Institute, put it bluntly:

“People who have been unemployed for longer have clearly had some challenges in getting back into the labor market.”

Take Sam, for example. After losing his job last fall, he figured he’d bounce back quickly. But as months passed, interviews dried up. Employers seemed to favor candidates with no recent gaps in their resumes. Sam’s story isn’t unique—once you’re out of work for a while, the odds of landing a new job drop fast, especially as companies get pickier and economic uncertainty grows.

These trends aren’t just numbers—they’re signals of deeper issues. The unemployment rate in July 2025 may look stable, but the rise in long-term joblessness and a shrinking labor force suggest that many Americans are still struggling to find their footing. And for certain groups, like older workers and Black Americans (whose unemployment rate jumped to 7.2% in July), the challenges are even steeper.

Why Long-Term Unemployment Is a Vicious Cycle (And Who’s Getting Caught)

Long-term unemployment isn’t just a number on a jobs report—it’s a tough, self-perpetuating cycle that’s getting harder to break, especially as the U.S. labor market shows new signs of weakness. The latest data reveals that the number of people out of work for six months or more jumped from 1.6 million to 1.8 million in July, now making up 24% of all unemployed Americans. That’s the highest share since early 2022, and it’s hitting certain groups much harder than others.

Employers Are Getting Picky—And Resume Gaps Still Hurt

One of the biggest challenges long-term joblessness creates is the dreaded resume gap. Employers, especially in uncertain times, tend to get extra cautious about who they hire. As Valerie Wilson, a labor economist at the Economic Policy Institute, puts it, “People who have been unemployed for longer have clearly had some challenges in getting back into the labor market.” With economic policy up in the air and tariffs changing the cost of doing business, companies are even more risk-averse. That means anyone with a long gap on their resume—no matter the reason—faces an uphill battle.

Who’s Getting Caught in the Cycle?

• Older workers: Persistent joblessness has historically hit older Americans the hardest. After the Great Recession, it became clear that the longer someone was out of work, the less likely they were to get hired again—especially if they were over 50.
• Black Americans: The Black unemployment rate increase is especially worrying. In July, it rose to 7.2%, up from a historic low of 4.8% in April 2023. Wilson notes,“Over the last two months, we’re seeing the black unemployment rate pick up, which is another one that as that starts to rise, we start to look for signals of a broader slowing in the economy.”This trend is even more concerning when you consider that unemployment rates for adult women and Whites actually dipped slightly in June 2025.
• Other marginalized groups: Historically, long-term unemployment trends show little improvement for certain demographics, including those with less formal education or disabilities.

Personal Riff: The Resume Gap Dilemma

Imagine sitting in an interview, trying to explain a two-year gap on your resume. Maybe you were laid off during a downturn, or you had to care for family. In today’s uncertain climate, that gap can feel like a giant red flag to employers who are already nervous about the future. For many, the longer the gap, the harder it is to get back in—making long-term unemployment a truly vicious cycle.

Economic Policy and the Job Market: Are Tariffs and Shake-ups Fueling the Problem?

When it comes to the economic policy effects on the job market, recent headlines have been anything but reassuring. The latest Bureau of Labor Statistics report showed not just a slowdown in hiring, but a jump in long-term unemployment—now at its highest since 2021. While the overall unemployment rate is still relatively low, the number of Americans out of work for six months or more has climbed to 1.8 million, making up nearly a quarter of all unemployed people.

So, what’s behind this uptick? One major factor could be the impact of tariffs. According to the conservative Tax Foundation, President Trump’s tariffs on imported goods are set to cost American households an extra $1,219 in 2025. That’s like a stealth tax, quietly raising the cost of living for families across the country. While the direct tariffs impact on employment in 2025 appears limited in the data, these higher costs can ripple through the economy, making businesses more cautious about hiring and expansion.

Labor economist Valerie Wilson from the Economic Policy Institute points out that employers are getting pickier as their costs go up and uncertainty grows. As she told HuffPost,

“I think that as things have softened, and employers are facing more uncertainty given the sort of chaotic nature of economic policy in this country, that it would be harder for those people to find new jobs.”

Political shake-ups are also adding to the confusion. In a move that stunned many, President Trump fired the head of the Bureau of Labor Statistics last week, claiming—without evidence—that the jobs numbers were “rigged.” Actions like this can undermine trust in official data and make both employers and job seekers nervous about what’s really happening in the economy.

• Tariffs = Higher Costs: $1,219 more per household in 2025.
• Political Chaos: Sudden firings and policy changes can spook employers into pressing pause on hiring.
• Employer Selectivity: As costs rise, companies may only hire the “perfect” candidate, leaving those with gaps in their resumes out in the cold.

And if policy uncertainty were a storm cloud, HR departments might already be prepping their arks. The latest Bureau of Labor Statistics report also revised previous months’ job growth downward, suggesting the job market may be even softer than it looks at first glance.

Industry Winners, Losers, and the Under-the-Radar Job Shifts

When it comes to employment trends July 2025, the U.S. labor market looks a bit like a band where half the instruments just stopped playing. The latest numbers show a patchwork of winners, losers, and some surprising shifts that don’t always make the headlines.

State Government and Healthcare: Still in the Spotlight

Despite the overall job growth slowdown, state government and healthcare sectors are quietly adding jobs. According to the Bureau of Labor Statistics, total nonfarm payroll employment increased by a modest 73,000 in July 2025, with state government and healthcare leading the way. These sectors are still hiring, but the momentum is noticeably down from earlier in the recovery. If you’re looking for stability, these areas remain the safest bets, at least for now.

Federal Government: Shedding Workers

On the flip side, the federal government continues to lose jobs. The sector has been shrinking for months, with no sign of a turnaround. This decline stands out in the employment by industry sector data, especially as other public sector jobs hold steady or grow. The ongoing cuts are a clear signal that not all government jobs are created equal in this market.

Social Assistance and Transportation: Losing Steam

Industries that boomed during the pandemic—like social assistance and transportation—are now seeing much slower growth. Monthly gains in these sectors have cooled off, reflecting a broader job growth slowdown that’s making it harder for job seekers to find new opportunities. As one labor economist put it, “Employers are facing more uncertainty given the sort of chaotic nature of economic policy in this country, that it would be harder for those people to find new jobs.”

Labor Force Participation: Flatlining

The participation rate labor force is holding steady at around 62.5% to 62.7% in mid-2025, and the employment-population ratio is hovering near 60%. This stability might sound good, but it also means that people aren’t coming back into the workforce in big numbers. Are folks sitting out, or just discouraged? It’s a question that’s getting harder to answer as long-term unemployment ticks up.

“People who have been unemployed for longer have clearly had some challenges in getting back into the labor market.” — Valerie Wilson, Economic Policy Institute

With the last three months marking the weakest job growth since the pandemic, these sector-by-sector shifts are worth watching as the labor market’s tune keeps changing.

History Repeats? Lessons From Past Job Crises (And a Few Unanswered Questions)

Looking at today’s long-term unemployment trends, it’s hard not to see echoes of the past—especially the slow, uneven economic recovery post-pandemic that’s starting to look a lot like the aftermath of the Great Recession. Back in 2009, even as the economy officially pulled out of recession, millions of Americans found themselves stuck in joblessness that dragged on for months or even years. The scars of that era still linger, especially for those who were out of work the longest.

One of the biggest lessons from that period is how slow recoveries can deepen and entrench long-term unemployment. As hiring slows, employers often become more selective, leaving those with resume gaps—often older workers or people from marginalized communities—at a disadvantage. Valerie Wilson, a labor economist at the Economic Policy Institute, points out, “People who have been unemployed for longer have clearly had some challenges in getting back into the labor market… as things have softened, and employers are facing more uncertainty… it would be harder for those people to find new jobs.”

Recent employment situation summaries show a worrying rise in long-term joblessness, with the number of Americans out of work for six months or more reaching its highest point since early 2022. The job growth slowdown is especially concerning for groups already at risk: the unemployment rate for Black Americans, for example, has jumped to 7.2% after hitting a record low just over a year ago. These demographic gaps tend to widen during slow recoveries, making it even harder for some to get back on their feet.

Some economists are now asking the tough question: could another recession be on the horizon? The overall unemployment rate remains relatively low, but the pace of job creation has clearly slowed, and the labor force is shrinking. These are classic warning signs that the labor market may be losing steam.

Looking back, many who struggled through the last crisis wish they’d known how long recovery would take—and how important it is to stay connected to the workforce, even in small ways. As we watch these long-term unemployment trends unfold, the unanswered question remains: what can we do differently this time, so history doesn’t repeat itself for millions of Americans still searching for work?

TL;DR: U.S. job growth is slowing, long-term unemployment is on the rise, and subtle cracks in the labor market—like demographic disparities and economic policy impacts—show there’s more going on than meets the eye. Watch for the signals behind the headlines.

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