AI and the job market: weak hiring, record-low confidence and a data centre backlash

The July report, published on 7 August, also revised May and June down to gains of 63,000 and 20,000 respectively. The unemployment rate ticked down to 4.1%, from 4.2% in June. But the labor force participation rate fell to 61.4%, the lowest reading since February 2021. ZipRecruiter labor economist Nicole Bachaud told USA TODAY that with job opportunities scarce, more workers are leaving the labor market altogether.

Health care was the only industry with notable gains, adding 22,000 roles, below its 36,000 monthly average over the past year. Local government education shed 50,000 jobs. Retail trade lost 19,000 and financial activities lost 14,000. Average hourly earnings rose 2 cents to $37.62, up 3.2% over 12 months, short of the 3.5% year-over-year consumer price increase recorded in June.

The weak payrolls number lands in a market where AI has become the default explanation for almost every hiring decision. Not all the data supports that reading.

Two reports, two directions

ADP's National Employment Report, released 5 August, said private employers added 44,000 jobs in July, driven by 36,000 roles in education and health services. ADP found hiring increased in financial activities, professional and business services, information, construction and manufacturing. It declined in leisure and hospitality, trade, transportation and utilities, and natural resources and mining. The two surveys disagree on the sign of the month.

Kory Kantenga, LinkedIn's head of economics for the Americas, said that outside health care "hiring has very little momentum" and that this is not a labor market reaccelerating, despite speculation earlier in the year. LinkedIn data showed applications per job seeker rose in July. Kantenga said the number of jobs available per person looking has been declining since a 2022 peak and has been relatively steady over the past year without recovering.

Meanwhile, Glassdoor's Employee Confidence Index fell to a record low in July. The share of employees reporting a positive six-month business outlook sank to 43.5%. Glassdoor chief economist Daniel Zhao said that even employed workers worry about landing their next role, a promotion or a raise: "Clearly, employees don't feel like the current job market is working for them."

Challenger, Gray & Christmas reported on 6 August that US-based employers announced 33,429 job cuts in July, down 27% from June and the lowest monthly total in two years. Announced layoff plans are down 41% this year against the first seven months of 2025. For the fifth straight month, artificial intelligence led the reasons companies cited for cuts, mostly in technology and transportation.

The same report found employers announced plans to hire 16,095 people in July, up 47% from June and the highest since 2022, with hiring plans up 25% year to date. Andy Challenger, the firm's chief revenue officer, said demand is showing up in aerospace, energy and manufacturing, "work that happens on a floor rather than a screen".

The entry-level squeeze

The clearest AI effect on hiring is not in the headline payrolls number. It is at the bottom of the ladder. A Windows Central analysis of reporting by Rest of World described Turkey's mobile gaming scene, which reached more than 800 studios at its peak and served as a pipeline for junior developers. One developer interviewed by Rest of World moved from a large studio shipping a game a week to founding his own studio. With Claude Code, he found he needed two employees to reach similar productivity. Entry-level roles are disappearing at smaller studios, while larger ones hesitate to hire inexperienced developers.

That pattern shows up in US graduate data too. According to the Federal Reserve Bank of New York, college graduates aged 22 to 27 had an unemployment rate of 5.7% as of June 2026, a full percentage point higher than two years earlier. The unemployment rate for all young workers was 7.2%. The underemployment rate, graduates working in jobs that do not require a bachelor's degree, reached 42% for recent graduates against 33.7% for all college graduates.

AI is also in the screening process. LinkedIn research cited by CNBC found 66% of recruiters said at the start of 2026 that they planned to increase their use of AI for pre-screening interviews, while 81% of job seekers said they had used or planned to use AI in their search. The NY Fed, however, cautioned against blaming AI for the hiring slowdown. It wrote that "while AI may be contributing to recent labor market developments, it is not the main driver" and that employers mostly intend to adopt AI through retraining.

Blue-collar demand and local opposition

One part of the AI economy is hiring in volume. CNBC reported that welders, pipefitters, HVAC technicians and electricians are in demand for data centre buildouts. ZipRecruiter's Bachaud put the mean minimum salary for data centre jobs at nearly $208,000 after a 125.1% year-over-year rise, and postings for welders and pipefitters are up 164% year over year. Justin Sinkovich of Columbia College Chicago pointed to Amazon's $12 billion Louisiana data centre and Meta's $27 billion Hyperion project as work that cannot be offshored. Cushman & Wakefield research cited in the same report estimates every 100MW of new data centre development creates nearly 1,300 local jobs.

Public opinion is moving the other way. Gallup found 70% of Americans oppose a data centre being built in their local area. A New York Times/Siena poll this month found roughly two-thirds opposed across parties, and a Texas Politics Project poll put opposition among voters at 57%. According to Data Center Watch, at least 75 projects worth roughly $130 billion have been blocked or delayed this year.

Political attention is following. A Pew Research Center survey of 3,488 US adults, conducted 22 to 28 June and published on 16 September, found 56% of Democrats are more concerned than excited about AI's increased use in daily life, against about half of Republicans. It is the first time Democrats have been more worried. Among Democrats, concern rose from 46% in 2023 to 56%, and is up 25 percentage points since 2021; among Republicans it fell 10 points to 49%. Democrats are also now more likely than Republicans to expect AI to lead to fewer jobs over the next 20 years, 75% against 68%.

None of this settles whether AI is causing the hiring slowdown. The July payrolls decline, the record-low confidence reading and the blocked data centre projects describe a labor market under pressure from several directions at once, and the surveys disagree about how much of it belongs to AI.