In July American payrolls fell by 23,000 and the unemployment rate improved, to 4.1 per cent. Peter St. Onge and E. J. Antoni described the mechanism without decoration: “It’s not just fewer jobs, but even fewer people in the workforce. That mechanically reduces the unemployment rate.” The rate is a fraction. When the bottom of it empties faster than the top, the number falls and the country does not improve.
Their count is 2.4 million people gone from the labour force since November. Roughly half of that is ageing, about a fifth is the reduction in immigration, and the remainder is concentrated among people aged fifty-five to sixty-four — the age at which a house and a portfolio can make giving up look like a decision rather than a defeat. The arithmetic is not disputed by the people who dislike its conclusion. It is simply not mentioned.
A discouraged 60-year-old who has given up looking for work is evidence of labor market weakness.
The longer series is worse, and nobody in charge discusses it. Of 132.8 million American men of working age, 44.07 million — a third — are not in the labour force at all. Male participation is 66.8 per cent, the lowest since 1948. Nine million more men are out of work than in 2012, and 891,000 left in the past twelve months alone. That is not a rounding error in a supply curve.
Scott Beaulier of the University of Wyoming gives the material half of the explanation: “The American economy has gradually moved away from some of the industries that historically provided good jobs to men without college degrees.” Brad Wilcox of the University of Virginia gives the other half: “It’s a major problem because men who don’t work full-time are more depressed, less happy and less likely to form strong and stable families.”
At the other end of the age range the door is being closed by machine. Erik Brynjolfsson and his colleagues at Stanford, working from payroll records through June 2026, find employment of twenty-two- to twenty-five-year-olds in AI-exposed occupations running 19 per cent below where it would be had it kept pace with their less-exposed peers. The mechanism is not mass firing. It is that nobody is hired: “Adjustment is occurring through employment rather than base compensation.”
The reduction in immigration is part of why labour supply is flat, and this argument asked for that reduction and would ask for it again. But it was sold as a wage story, and the wage story has not arrived. The young are not being priced up; they are not being hired. The old are not being retained; they are being retired. A tighter labour force was supposed to make workers scarce and therefore expensive. So far it has only made them fewer. That is not the promise that was made.
The chair of the Federal Reserve spent 28 August at Jackson Hole calling the labour market consistent with full employment and hinting at higher rates, having already conceded where the fault of the last five years lies: “The responsibility for 65 months of sustained, elevated inflation sits squarely with the central bank.” The candour is welcome. The blindness next to it is not. A country can print a four handle on its jobless rate and still be losing its men, its graduates and its wages, one revision at a time.
