US shed 23,000 jobs in July as AI cuts both ways for entry-level workers

The July drop followed revised gains of 20,000 jobs in June and 63,000 in May, according to USA TODAY's report on the Labor Department data. The unemployment rate ticked down to 4.1%, but the labour force participation rate fell to 61.4%, the lowest reading since February 2021. Average hourly earnings rose 2 cents to $37.62 and are up 3.2% over 12 months, below the 3.5% year-over-year consumer price increase recorded in June.

Only health care posted notable gains, adding 22,000 roles. Local government education fell by 50,000, retail trade shed 19,000 and financial activities lost 14,000.

ZipRecruiter labour economist Nicole Bachaud told USA TODAY that "with job opportunities remaining scarce, more workers are exiting the labor market entirely." Kory Kantenga, LinkedIn's head of economics for the Americas, said that outside health care "hiring has very little momentum." The ADP National Employment Report, released on 5 August, told a different story: it estimated private employers added 44,000 jobs in July, driven by 36,000 roles in education and health services.

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%. Challenger, Gray & Christmas reported on 6 August that US employers announced 33,429 job cuts in July, down 27% from June and the lowest monthly total in two years. For the fifth straight month, artificial intelligence led all reasons companies cited for cuts, mostly in technology and transportation. Announced hiring plans, though, rose 47% from June to 16,095, the highest since 2022.

Two ends of the same squeeze

For new graduates, the picture is worse than the headline rate suggests. According to CNBC, the Federal Reserve Bank of New York put unemployment for college graduates aged 22 to 27 at 5.7% as of June 2026, a full percentage point higher than two years earlier for that cohort. The unemployment rate for all young workers was 7.2%. The underemployment rate, meaning graduates working jobs that do not require a bachelor's degree, reached 42% for recent graduates against 33.7% for all college graduates.

AI is now part of the screening process. 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 cited in 16.5% of job descriptions in spring, up from 10.5% the previous autumn, with 28% of employers seeking early-career talent who can use AI at work. Nearly one-third of graduating seniors in NACE's 2026 student survey said AI skills would be of little or no importance to their careers.

At the bottom of the games industry, the same tools are removing the ladder's first rung. Windows Central, citing a Rest of World report, described how Turkey built more than 800 studios at its peak as a pipeline for junior developers. One developer interviewed by Rest of World went from a large studio shipping a game a week to founding his own shop, where with Claude Code he needed just two employees for similar output. A Turkish university director is now telling students to build their own games while in school rather than expect an introductory role.

Blue-collar work is running the other way. CNBC reported that welder and pipefitter postings are up 164% year over year, and ZipRecruiter's Bachaud said the mean minimum salary for data centre jobs rose 125.1% to nearly $208,000. Gallup found 70% of Americans oppose a data centre in their local area, and Data Center Watch counts at least 75 projects worth roughly $130 billion blocked or delayed this year.

Politics is tracking the anxiety. Pew Research Center reported on 16 September that 56% of Democrats say they are more concerned than excited about AI's growing role in daily life, against about half of Republicans, and that 75% of Democrats expect AI to mean fewer jobs over 20 years, compared with 68% of Republicans.