目标变了：劳动力供给受限新时代的就业市场解读

Key points:

• The US labor force has shrunk by around 700,000 workers so far in 2026. Absent a surprise fourth-quarter shift, 2026 will be just the fifth calendar year since 1948 we’ve seen a shrinking labor force, and only the second instance that’s happened outside of a recession.
• Nevertheless, payroll growth has averaged 80,000 a month in 2026, and the unemployment rate has fallen from 4.3% in January to 4.1% in August.
• Declines in the foreign-born labor force participation, the continued aging of the workforce, and women’s growing share of the workforce help explain this shift.

If you’ve been confused by the past few months’ jobs reports, you aren’t alone. In July 2026, the initial BLS release showed an outright loss of 23,000 jobs, with major downward revisions to some of the gains originally reported in May and June. Even with that decline, the unemployment rate ticked down to 4.1%. In August, the opposite occurred: an unexpectedly high number of jobs were added, along with upward revisions to June and July, but the unemployment rate didn’t budge.

So what gives? It’s a confusing dynamic that can be (somewhat) explained by some basic math. The unemployment rate is calculated as a share of the labor force, meaning that when someone retires or stops working (and stops looking for work) for any other reason, they are excluded from the calculation altogether. But the trend also suggests a potent combination of structural shifts — including an aging domestic workforce and declining immigration — are forcing a rapid reconsideration of many longstanding conventional wisdoms that help us interpret labor market signals.

Over the past year, we’ve highlighted how population changes — from aging baby boomers to declining immigration and limits to increased women’s labor force participation — will begin to shape labor market dynamics and reduce the size of the workforce. The population adjustments released by the BLS at the start of 2026 suggested that those forces had already begun to take shape in 2025, and recent data suggest that trend has continued into 2026. Since August of last year, the civilian labor force has declined by 973,000 people. Absent an unexpected Q4 shift, 2026 will be just the fifth time since 1948 that the labor force has declined in a calendar year, and only the second time outside of a recessionary period (the other being a small decline in 2013).

Three forces converge

For years, researchers have warned about the United States’ looming demographic cliff, as falling birth and labor force participation rates leave fewer young workers available to backfill a rapidly aging workforce. Until recently, those predictions seemed to be a bit sensationalized. Even as baby boomers began to enter retirement age, the US labor force steadily grew throughout most of the 2012-2019 period, before exploding in the post-pandemic years at the highest rates since the 1990s. While the domestic labor force was aging, relatively high levels of participation from women and immigrant workers kept the most extreme predictions at bay.

Recently, those dynamics have (very quickly) begun to shift. Net international migration has slowed sharply in recent years, with the US Census Bureau projecting it could fall to just 321,000 in the 12-month period ending June 2026, well below the more than 2.7 million registered as recently as 2024. And despite recovering in the years following the pandemic, female labor force participation appears to have settled below its February 2020 high. With these counteracting forces no longer working against the aging population, outright labor force decline has begun to take hold.

Indeed, while much has been made of the aging population’s effect on the size of the labor force, the most recent declines in the participation rate are more attributable to reductions in participation across all age groups rather than workers simply aging out of the workforce. As such, explaining these shifts requires understanding the convergence of multiple forces at once.

A declining foreign-born workforce

Stricter immigration policies implemented over the past two years have choked off the steady flow of foreign-born workers into the US labor force, which has now declined year-over-year during the past several months. As a result, a declining foreign-born workforce is helping to shrink the labor force, rather than contributing to its growth. Earlier this year, the Census Bureau projected modest but positive net migration for the year ending June 2026. But immigration policies, including TPS terminations, parole terminations, and longer work permit processing times, mean that many migrants who remain in the country may have dropped out of the formal, measured labor force.

This recent decline has been telegraphed in our data for some time. Foreign interest in US jobs — measured by the share of clicks on US job postings from job seekers abroad — has been declining since it peaked in August 2023. In addition, Indeed’s job seeker click data has previously been shown to track future migration patterns across OECD countries. Foreign job seeker interest has continued to go down, dropping to a 6-year low in April 2026 and staying close to that level since, suggesting further declines still to come in the foreign-born workforce.

Foreign-born workers make up around 19% of the overall labor force, but a decline in their numbers will have a disproportionate impact on some critical industries that rely more heavily on these workers, such as healthcare and construction. Any further declines in foreign-born workers are especially worrisome in many healthcare fields, where persistently high demand for workers has driven most of the growth in overall employment over the past year. Nearly a quarter of physicians practicing in the US are foreign-born, as are 17% of nurses and nearly 40% of home health aides. With an aging population raising the demand for healthcare labor, a pullback in foreign interest threatens the pipeline that the healthcare system has grown reliant on.

Job openings data from the Healthcare & Social Assistance subsector illustrates this potential supply-side squeeze. Job openings jumped 11% over the past year, even as hires fell 5%. In other words, employers have more open roles to fill, but are managing to fill fewer of them, a pattern more consistent with shrinking labor supply than with cooling labor demand. Given that foreign-born workers make up a significant share of the healthcare workforce, this divergence between surging openings and falling hires may be an early sign of what a sustained decline in foreign-born labor supply looks like across the wider economy.

The same pattern appears in the Manufacturing and Wholesale Trade sectors, where job openings rose over the past year even as hires declined. To the extent that foreign-born labor supply continues to contract, hiring constraints may be most binding in sectors where employment growth is a stated policy priority.

The Gender Divide

Differences across genders are also driving shifts in the labor market. Male labor force participation has been steadily falling for decades, while female participation rose throughout the 20th century and peaked in early 2000. While female participation rates recovered more after the pandemic than male labor force participation did, it now appears to be steadily dropping, applying further pressure against labor force growth.

Unlike immigration, the shift in participation is less attributable to any single factor. Part of the decline (for both men and women) is simply due to population aging. The male labor force participation rate fell to 67.2% as of August, down from 67.9% a year ago and among the lowest readings since the BLS began tracking the series in 1948. But aging alone does not explain the shift. Even among prime-age workers, falling participation rates are pulling men out of the labor force more quickly than women.

In addition to changes in labor force participation rates, employment opportunities for women seem to be exceeding those for men in recent years. The number of non-farm jobs held by women increased by 495,000 over the past year, while the number of jobs held by men increased by just 108,000. As a result, women hold more jobs than men in the US for just the third time in US history.

Area chart titled “The male-female employment gap has disappeared” shows the difference in the number of nonfarm payroll jobs held by men versus women from January 1990 to August 2026. In recent months, women have held more nonfarm payroll jobs than men.

This shift isn’t driven solely by the growth in female-dominated sectors like healthcare and education. Over the past year, female-held jobs have increased more than male-held jobs across nearly every sector, including in male-dominated sectors like professional and business services and manufacturing. Still, the dominant role that healthcare and social assistance has played in hiring over the past year does seem to have had an influence. Despite accounting for just over half of all jobs held in the US, women accounted for 82% of all employment growth over the past year, largely because of growth in healthcare and social-assistance roles, which overwhelmingly tend to be held by women.

Interaction of immigration and gender shifts

The third shift ties directly to the immigration story above, and it too cuts along gender lines. Foreign-born men participate in the labor force at a strikingly high rate; 76.4% in August, more than 10 points higher than the 65.6% for native-born men. Foreign-born women show no such edge, with their participation sitting just slightly below the 56.5% rate for native-born women. They are, however, the only one of these four groups whose participation rose over the past year, narrowing that gap from 1.8 points to half a point. Immigration, in other words, has been adding high-participation men to the workforce without a matching lift on the women’s side. Thus, a slowdown in immigration points to a continuation of the male labor force participation decline behind this trend.

Conclusion

These labor supply shifts play a significant role in distinguishing a “good” monthly jobs report from a “bad” one. There will still be months, like August, where monthly gains exceed 100,000. But those months are likely to be far rarer, and even when they do arise, they could point to outsized growth in female-held jobs.

The cumulative effect of these shifts is that we may need to begin reconsidering some long-standing conventional wisdoms. For years, the rule of thumb has been that the labor market needs to add about 100,000 jobs every month to keep the unemployment rate from rising. But it’s likely time to find a new benchmark, because the market more recently has been adding far fewer than 100,000 jobs per month, and unemployment has still fallen. So far in 2026, US employers have added only about 80,000 jobs per month, and the unemployment rate has fallen. Compare that to 2024, when employers added 122,000 jobs a month, and the unemployment rate rose. A look at the data underlying these labor supply shifts gives some hints on how we should quantify this emerging new normal going forward.

The United States is likely entering a period where hires and payroll employment will be lower than we’ve grown to expect — not because of limited demand, but because there simply aren’t enough workers to fill available jobs. If both the supply of workers and jobs available for them shrink, everything else in this economy is at risk of shrinking too. Even with the hope of AI-driven productivity gains, a labor market with no job growth is unlikely to result in a robust economy.

The post The Goalposts Moved: Interpreting the Labor Market in a New Era of Constrained Labor Supply appeared first on Indeed Hiring Lab.