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Cracks Beneath the Surface of the U.S. Job Market

The U.S. labor market is showing signs of resilience on the surface—but economists are cautioning that beneath the topline numbers, troubling trends are emerging. According to the Bureau of Labor Statistics, the economy added 139,000 jobs in May, slightly down from 147,000 in April, but still outperforming some forecasts. The unemployment rate remained stable at 4.2%, and the underemployment rate (workers who want full-time jobs but can only find part-time roles) stayed at 7.8%.

But these seemingly strong figures don’t tell the whole story.

“The job market is worse than it looks. We’re just treading water,” said Andrew Flowers, Chief Economist at Appcast, a recruitment analytics firm.

In the past 12 months, the U.S. has averaged just 144,000 new jobs per month—the lowest average since 2011, excluding the pandemic-era downturn. According to Flowers, this slowdown reveals a fragile foundation that could crack under future economic pressure.

Healthcare Is Propping Up Job Growth—For Now

Nearly 30% of all job gains in the past three years have come from just one sector: healthcare. Alongside leisure and hospitality and social assistance, these industries have carried much of the job creation weight. However, proposed policy shifts could jeopardize that stability.

A central concern is Trump’s "Big, Beautiful Bill", a massive spending package currently moving through Congress. Among its provisions:

• $700 billion in cuts to Medicaid
• Stricter and costlier enrollment processes for Affordable Care Act plans

“Health care has been the one stalwart industry to power job growth. If funding gets slashed, we risk killing the golden goose,” Flowers warns.

If enacted, the bill could significantly slow hiring across health-related industries, potentially stalling one of the economy’s last reliable engines of job creation.

Tariffs and Spending Pressures Could Hit Hospitality and Retail

Leisure and hospitality, another major job growth contributor, is also under threat. Rising tariffs are beginning to ripple through the economy, increasing costs for businesses and ultimately reducing consumer spending.

Flowers pointed to recent declines in warehouse and retail hiring—once hotbeds of job growth—as early indicators of tariff damage. As prices rise, discretionary sectors like restaurants, travel, and entertainment could feel the squeeze.

“A lot of the eggs are in one basket, and that basket is health care. If that falters, it could cascade across the economy,” Flowers said.

Fewer Openings for Entry-Level and Knowledge Workers

The job-search experience tells another side of the story.

According to ZipRecruiter’s latest job-seeker confidence index:

• 40% of job-seekers are not confident about available opportunities
• Nearly 33% expect even fewer jobs six months from now

The gap between those inside and outside the workforce is growing.

“If you have a job, it’s not bad—low layoffs, wage growth, and stability,” said Flowers. “But if you’re trying to get a job, it’s becoming increasingly difficult.”

This is particularly true for recent grads and entry-level workers. Hiring in white-collar sectors like finance, tech, marketing, and sales has slowed dramatically. Meanwhile, professional and business services—typically a strong growth area—are actively shedding jobs.

“We told young people for decades: ‘Go to college.’ Now all the jobs they trained for are the weakest in the market,” Flowers said.

At the same time, blue-collar and skilled trade jobs are struggling to attract talent. The result is a labor market mismatch that could grow into a structural challenge.

Fed Report Confirms: Caution, Contraction, and Uncertainty

A recent report from the Federal Reserve aligns with Flowers’ concerns. According to the Fed’s Beige Book:

• Business activity has contracted in several districts
• Hiring remains flat, with low turnover and growing candidate pools
• Both businesses and households are acting with increased caution and uncertainty

“All Districts reported elevated levels of economic and policy uncertainty,” the report stated, suggesting a broad slowdown in consumer confidence and hiring momentum.

What It Means for Workers and Policy Makers

The bottom line? America’s job market is not collapsing—but it is fragile and imbalanced. A strong showing in healthcare masks deep weaknesses in other sectors, and emerging federal policies and global trade tensions could further weaken those supports.

Policymakers and businesses alike must tread carefully. Reducing support for healthcare, ignoring tariffs’ ripple effects, and underinvesting in workforce training for skilled trades and entry-level roles could accelerate the cracks already showing in the job market’s foundation.

For job-seekers—especially younger Americans—the coming months may be less about navigating a booming economy and more about strategic survival.