April’s employment statistics surpassed predictions for the second month running by a significant amount, with unemployment rates remaining stable despite ongoing geopolitical tensions and inflationary concerns from the U.S.-Israeli conflict with Iran.
However, beneath these positive headlines lies a more complex picture of the nation’s job market. Though businesses report unprecedented employment numbers, household surveys indicate declining employment levels. Additionally, America’s workforce is contracting rapidly, with participation rates hitting nearly five-year lows and hiring concentrated in fewer industries than typical.
CONFLICTING EMPLOYMENT MEASURES
The Department of Labor’s monthly jobs data combines two separate surveys: one tracking business and government payrolls, and another surveying American households about employment status. These surveys are painting vastly different pictures this year.
According to payroll data, which serves as the standard for monthly job creation figures, total employment reached an all-time high of 158.7 million workers, growing by 304,000 positions year-to-date. Conversely, household survey data, which determines the national unemployment rate, shows employment dropping by 1.37 million in 2026.
WORKFORCE CONTRACTION
America’s labor force – encompassing both employed individuals and those actively seeking work – has contracted since President Donald Trump began his second term. Approximately 700,000 fewer people participated in the workforce in April compared to January 2025, with declines occurring in four of the last five months.
UNPRECEDENTED WORKFORCE EXODUS
The workforce has been contracting at an extraordinary pace since late 2025. Roughly 1.55 million people have exited the labor force since reaching peak levels last November, representing the largest departure wave outside of the 2020 COVID-19 pandemic shutdowns. The substantial drop in labor force participation has prevented unemployment rates from rising despite household reports of significant employment losses.
PARTICIPATION RATES DECLINING RAPIDLY
Although unemployment rates remain steady, the participation rate – representing the percentage of the total population either working or seeking employment – continues falling. This key labor market indicator has declined for five consecutive months, reaching its lowest point since the mid-1970s, excluding the pandemic period.
IMMIGRATION POLICY EFFECTS
Trump’s return to office with promises of stricter immigration enforcement has significantly impacted labor market dynamics. Under his predecessor Joe Biden, immigrant workers drove most workforce and employment growth. Trump’s policies initially reversed this trend during early 2025, with all job gains and workforce expansion coming from native-born workers while immigrant participation declined. Since the fourth quarter, these patterns have largely shifted back, with native-born worker employment and participation returning to January levels. Immigrant levels remain down but less dramatically than mid-year.
LIMITED HIRING SCOPE
Beyond total job creation numbers, the breadth of hiring across different sectors remains important. Current hiring has concentrated heavily in select service industries, particularly healthcare. The Labor Department’s diffusion index, which measures hiring breadth, shows slightly more industries expanding than contracting recently, though the 12-month average still indicates narrowing employment patterns. Manufacturing, a key focus of Trump’s revival efforts through import tariffs, continues showing poor hiring breadth. April data revealed 2,000 manufacturing job losses, ending three months of factory employment gains, with 77,000 fewer factory positions than when Trump resumed office.
