WASHINGTON — The nation’s employment sector has emerged from a difficult period, yet continues moving forward at a sluggish pace, leaving young workers and job hunters feeling discouraged.
Economic forecasters surveyed by FactSet anticipate the Labor Department will announce Friday that employers across private companies, nonprofits, and government sectors created 105,000 new positions in May. While this figure represents decent progress given recent modest employment trends, it marks a decline from April’s 115,000 job additions.
Employment growth has recovered this year following a disappointing 2025, demonstrating surprising strength despite economic instability and severely elevated energy costs stemming from the Iran war.
The unemployment rate is projected to hold steady at 4.3% for May, according to FactSet projections. However, even with improvements since last year, job creation remains significantly below the surge that occurred after pandemic restrictions ended.
Employees, job hunters, and business owners find themselves trapped in an uncomfortable “no-hire, no-fire” employment environment. “Those who have jobs are clinging to them, while those without are left wanting,” wrote Diane Swonk, chief economist at the tax and consulting firm KPMG, in analysis released before the employment report. “The result is a sense of being frozen or left in a sort of labor market purgatory.”
Numerous young adults face difficulties entering a stalled job market. Workers who have lost their positions also encounter challenges returning to employment. Over 25% of unemployed individuals in April had been without work for more than six months, an increase from under 20% two years earlier.
With diminished opportunities, Americans hesitate to leave current positions to pursue better options elsewhere. The number of people voluntarily leaving jobs fell to its lowest point since August 2020’s concerning period when COVID-19 was spreading widely.
During the previous year, businesses created just 9,700 positions monthly, the smallest increase outside a recession since 2002.
Employment has improved this year, generating an average of 76,000 new positions monthly from January through April. Substantial tax refunds resulting from President Donald Trump’s 2025 tax legislation have boosted the economy, balancing out higher energy costs since the United States and Israel launched attacks on Iran in late February. However, most refunds have been saved, and gas prices continue exceeding $4 per gallon.
Medical sector companies have been supporting the employment market.
During the past year, they have created over 456,000 positions while all other American employers combined have eliminated 205,000 jobs.
Martha Gimbel and Ryan Nunn from Yale University’s Budget Lab observe that robust healthcare employment growth is expected as Americans age and require more medications and medical visits. The sector’s job expansion aligns with Labor Department forecasts from ten years ago. “The question is not why healthcare has kept hiring—it is why other industries have not,” they stated in research released Tuesday, proposing that an immigration enforcement campaign reducing foreign-born workers might explain this trend.
At minimum, the United States requires fewer new positions than previously needed. Decreased immigration and increasing Baby Boomer retirements mean fewer people seek employment. Consequently, the break-even threshold—new jobs needed to maintain stable unemployment—has likely fallen to nearly zero from the typical 155,000 monthly additions required two or three years ago, a Federal Reserve analysis indicates.
Some experts worry artificial intelligence will eliminate entry-level positions. However, economists Gregory Daco and Lydia Boussour from tax and consulting firm EY-Parthenon noted Tuesday that AI “adoption is proving more gradual and costly than many anticipated. Firms are increasingly using AI to enhance productivity and control labor costs.” Yet AI has decreased hiring rather than “triggering broad-based layoffs.”
A recent Federal Reserve Bank of New York study identified another factor behind young people’s difficulty securing post-graduation employment: remote work expansion. Companies appear hesitant to hire recent graduates for home-based positions because training and mentoring becomes more challenging without office presence.
