The U.S. labor market has reached a turning point, according to the most recent releases from the Bureau of Labor Statistics (BLS). The Job Openings and Labor Turnover Survey (JOLTS) for July, the August Employment Situation report, and the annual benchmark revision released in early September paint a picture of a cooling labor market, shifting opportunities, and a need for adaptive strategies in workforce development.
A Shift in the Balance Between Job Openings and Job Seekers
The JOLTS report showed job openings falling by 176,000 to 7.18 million in July, a ten-month low. The job openings rate slipped to 4.3 percent, the lowest since mid-2020. For the first time since April 2021, there are now more unemployed workers than job openings, with a ratio of 0.99 unemployed per job opening.
Hires ticked up slightly to 5.3 million, but the hires rate remained flat at 3.3 percent, suggesting that employers are bringing on workers at a slow pace. Layoffs edged higher, reaching 1.81 million, though the rate remained steady at 1.1 percent. Sector-specific declines were notable in health care and social assistance, retail trade, and arts and entertainment, while modest gains appeared in manufacturing, construction, and the federal government.
Employment Situation: Weak Payroll Growth, Rising Unemployment
The August jobs report, released September 5, reinforced these signs of slowing momentum. Nonfarm payrolls increased by only 22,000, well below expectations, and the unemployment rate climbed to 4.3 percent—the highest since 2021. Manufacturing shed 12,000 jobs, with transportation equipment especially hard-hit due to labor disputes.
Surveys show worker sentiment softening as well. The New York Federal Reserve reported that only 44.9 percent of workers believe they could quickly find a new job if laid off, a record low. Confidence levels are deteriorating just as competition for available jobs is rising.
Benchmark Revision: Job Growth Overstated by Nearly a Million
Perhaps the most consequential development for labor-market analysis is the BLS benchmark revision released September 9. Using more comprehensive data from the Quarterly Census of Employment and Wages (QCEW), the agency revised job creation between April 2024 and March 2025 down by 911,000 positions—the sharpest downward revision since at least 2000.
This means that the economy has been weaker than previously understood, with labor-market strength overstated for much of the past year. For workforce development professionals, this calls for recalibrating assumptions about employer demand and the pace of hiring.
What This Means for Workforce Development
For professionals in the workforce field, these developments carry significant implications:
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Increased competition for jobs: With the number of job seekers now exceeding available openings, workforce programs must double down on career readiness, reskilling, and placement support.
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Sectoral shifts: Declining openings in health care and retail—two traditionally large employers—signal the need to guide clients toward growth areas such as manufacturing, construction, and federal hiring initiatives.
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Worker confidence: Deteriorating sentiment suggests a greater need for career coaching, counseling, and holistic supports that keep individuals engaged during slower job searches.
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Policy signals: Weakening job creation and downward revisions increase pressure on the Federal Reserve to cut interest rates. While policy changes may eventually stimulate hiring, workforce systems need to act now to respond to immediate labor-market challenges.
Looking Ahead
Workforce development professionals stand at the front line of this transition. By staying close to sector data, adjusting training pathways, and supporting both workers and employers, the field can help communities navigate this period of cooling demand while preparing for the opportunities that will follow.