The U.S. government, through agencies like the Bureau of Labor Statistics (BLS), and individual states, track the job market by focusing on two key economic principles: labor supply and labor demand. This is not a simple calculation but rather a comprehensive analysis of various data points to create a detailed picture of the labor market.
Labor Supply
Labor supply refers to the number of available workers. A higher wage or salary generally increases the supply of labor, as it incentivizes more people to seek employment. The government and states determine labor supply by analyzing:
- Population Size and Demographics: A larger population and a growing working-age population increase the potential labor supply.
- Labor Force Participation Rate: This metric tracks the percentage of the working-age population that is either employed or actively looking for a job.
- Education and Skills: The skills, education, and credentials of the workforce are crucial. States, in particular, use longitudinal data systems to track the number of new credentials and certifications awarded to align their workforce with employer needs.
- Work Preferences: Factors like work-life balance, retirement trends, and preferences for flexible work also influence the supply of available workers.
Labor Demand
Labor demand represents the number of jobs employers want to fill. A lower wage or salary generally increases the quantity of labor demanded by employers. Governments and states measure this by examining:
- Economic Conditions: A growing economy typically leads to higher demand for labor as businesses expand. Conversely, a downturn reduces job openings.
- Job Postings and Openings: A direct indicator of demand is the number of job openings reported by employers. This data is often used to create “supply-and-demand reports” that show where gaps exist between available workers and open positions.
- Industry and Sector Growth: Demand is “derived demand”—it’s dependent on the demand for the goods and services produced. For example, a rising demand for healthcare services will increase the demand for nurses and doctors.
- Technology and Regulations: New technologies can either replace workers, decreasing demand, or create new jobs, increasing it. Government regulations can also influence demand, for instance, by mandating certain staffing levels in a specific industry.
The Current U.S. Jobs Market Condition
The U.S. job market has been in a relatively stable state, characterized by a low unemployment rate and a “no hire, no fire” dynamic. This means that while companies are reluctant to lay off workers, hiring has also slowed down.
- The unemployment rate has been holding in a narrow range between 4.0% and 4.2% since May 2024.
- Job gains have slowed significantly in recent months, averaging about 35,000 new jobs per month in the three months leading up to July 2025. This is less than a quarter of the pace from the previous year.
- Layoffs remain low, with the number of Americans filing for jobless benefits staying within a consistent range. This suggests employers are holding on to their current staff despite the economic slowdown.
- Sectors such as health care and social assistance continue to add jobs, while the federal government has seen employment losses.
- The labor force participation rate has seen a modest decline over the past year.