US shed 23,000 jobs in July as AI anxiety splits voters and hiring weakens

The unemployment rate slipped to 4.1%, its first move off 4.3% in three months. USA TODAY reported that some economists put the dip down to people leaving the labour force rather than to hiring. The participation rate fell to 61.4%, the lowest since February 2021.

That is the labour market AI has landed in. Not a mass layoff event, but a market where fewer workers are moving and fewer doors are opening.

Hiring slows, but the picture is not one number

May and June were revised down to 63,000 and 20,000 jobs respectively, so the spring rebound was weaker than first estimated. Health care was the only sector with notable gains, adding 22,000 roles, still below its 12-month average of 36,000. Local government education lost 50,000 jobs, retail shed 19,000 and financial activities dropped 14,000.

The private payroll tracker from ADP, released on 5 August, told a different story. It counted 44,000 private-sector jobs added in July, with 36,000 of those in education and health services. The two reports disagree, and reporters covering the monthly numbers have to hold both in view.

"With job opportunities remaining scarce, more workers are exiting the labour market entirely," ZipRecruiter labour economist Nicole Bachaud said in a note to USA TODAY.

Kory Kantenga, LinkedIn's head of economics for the Americas, was blunter about the rest of the economy. "Outside of health care, hiring has very little momentum," he said. He added that "this is not a labor market that's reaccelerating despite speculation to the contrary earlier this year."

Quits, layoffs and openings were all little changed in June, according to Labor Department data released on 4 August. That is the fingerprint of the "low-hire, low-fire" market economists described in 2025. Challenger, Gray & Christmas reported 33,429 announced job cuts in July, down 27% from June and the lowest monthly total in two years. Announced hiring plans rose 47% to 16,095, the highest since 2022.

Who blames AI, and who does not

Artificial intelligence led all cited reasons for job cuts for the fifth straight month, most of them in technology and transportation. The political reading of AI is shifting in ways that cut across the usual lines. A Pew Research Center survey of 3,488 US adults, conducted from 22 to 28 June and published on 16 September, found that for the first time Democrats are more likely than Republicans to say they are more concerned than excited about AI's growing role in daily life: 56% against 49%.

That gap is driven by the ideological edges. Concern among liberal Democrats rose from 45% in 2023 to 63%, while it fell 14 points among conservative Republicans. Views in the middle of both parties barely moved.

Democrats are also now more likely to expect AI to mean fewer jobs over the next 20 years, 75% against 68% for Republicans, a reversal from two years ago. Roughly half of US adults now say they are more concerned than excited about AI, up from 37% in 2021.

For young workers the anxiety has a concrete edge. According to the Federal Reserve Bank of New York, graduates aged 22 to 27 had an unemployment rate of 5.7% as of June 2026, a full point higher than two years earlier and well above the national average. The underemployment rate for recent graduates reached 42%, against 33.7% for all college graduates.

Employers are automating the first filter. LinkedIn research cited by CNBC found 66% of recruiters planned to increase their use of AI for pre-screening interviews at the start of 2026, while 81% of job seekers said they had used or planned to use AI in their search. The National Association of Colleges and Employers found AI skills named in 16.5% of job descriptions in the spring, up from 10.5% the previous autumn. Close to a third of graduating seniors told NACE that AI skills would be of little or no importance to their careers.

The trades are the other half of the story

Not every AI-linked job is disappearing. Data centre construction has pulled welders, pipefitters, electricians and HVAC technicians into demand. ZipRecruiter's Bachaud said the mean minimum salary for data centre roles rose 125.1% year over year to nearly 208,000 dollars, with welder and pipefitter postings up 164%. Cushman & Wakefield research cited by CNBC estimates every 100MW of new data centre development creates nearly 1,300 local jobs.

The politics may catch up with the pay. Gallup found 70% of Americans oppose a data centre in their area, and Data Center Watch counts at least 75 projects worth roughly 130 billion dollars blocked or delayed this year. Texas governor Greg Abbott has issued a moratorium on new data centre grid approvals. The blue-collar AI boom, like the white-collar one, now depends on permission.