Labor experts say the job market is looking up, driven by rising wages and the lowest number of new unemployment filings in nearly 60 years.
The payroll processing firm ADP reported Wednesday that wages rose year over year last month by 4.4% for workers staying in their jobs, higher than the latest inflation rate of 3.5% reported in June. Those switching jobs saw a 7% bump, the largest since August 2025.
“Real wage growth has improved because inflation has moderated at the same time that it’s getting harder to find workers,” said Scott Siff, CEO of Pivoters, an AI job-matching platform for older workers switching careers. “That’s a recipe for driving up real wages.”
The salary analytics firm Payscale reported Tuesday that 30% of 1,200 companies it surveyed plan to offer slightly bigger raises next year, up from 16% last year. It projects the average raise will be 3.5%, up from 3.4% a year ago.
“The strongest wage growth is showing up where employers still face skill shortages or sustained demand,” said Matthew Warzel, president of MJW Careers, a resume-writing firm.
He said wages are growing fastest for workers in utilities, construction, maintenance, healthcare, social services and private educational services.
Meanwhile, Department of Labor figures show that jobless claims dipped to 187,000 during the week ending July 18. That’s the lowest since the agency counted 182,000 in September 1969, when the workforce of 81.4 million was less than half its current size of 169.4 million.
“We are at a bit of a crossroads,” said Jason Leverant, president of the national staffing company AtWork. “Job security is strong, but job mobility is weak,” referring to how frequently workers move between jobs.
Most workforce analysts still described the job market as a “low hire, low fire” environment.
They chalked that up to artificial intelligence eliminating white-collar roles, employees hugging jobs, and companies adopting a cautious stance toward Trump administration tariffs.
ADP reported on Wednesday that private employers added 44,000 jobs last month, below a Dow Jones forecast of 75,000 hires. Most of the growth came from healthcare, with the rest occurring in other service industries.
“There’s reason for optimism based on the latest numbers, but I’d describe today’s labor market as stable, not booming,” said Maria Flynn, CEO of the workforce development nonprofit Jobs for the Future.
“A market that’s genuinely booming shows strength both in employer hiring and worker movement,” added Ms. Flynn, a former senior Labor Department official. “Right now we’re seeing employers hold onto the workers they have without adding many new ones, which is a more cautious kind of stability.”
The Bureau of Labor Statistics will release its next workforce participation estimate on Thursday. The last estimate found 61.5% of eligible Americans older than 15 employed or looking for jobs in June, down slightly from prior months.
Joel Marotti, senior managing partner at Vertical Media Solutions, a Michigan-based career coaching firm, noted BLS data showing more than 1.1 million eligible people have left the civilian workforce since February.
“A market can look calm on the surface while it’s losing depth,” Mr. Marotti said in an email. “For anyone trying to navigate this as a worker, the sort of practical advice is kinda simple: Stay employed while you search.”
Changing needs
Other reports have warned that improving wage and unemployment numbers could mask deeper growing pains in the job market.
A recent analysis by MyPerfectResume found that the current median income of $52,460 a year in the nation’s 50 largest metropolitan areas was insufficient to afford “a stable, middle-class lifestyle.”
The resume-building website estimated that a single adult needed an average salary of $104,681 to cover basic expenses, savings and “modest discretionary spending” in cities ranging from New York to Memphis, Tennessee.
Jasmine Escalera, a career expert at MyPerfectResume, noted that the report found 72% of workers it surveyed relying on a second income.
“A full-time paycheck isn’t enough for many workers to build the life they want, so they’re thinking differently about what makes a job worth taking,” Ms. Escalera said in an email. “People may be looking for jobs that give them room to earn additional income through remote work, predictable schedules, or enough flexibility to support a side business or freelance work.”
Andrew Crapuchettes, CEO of the Idaho job board RedBalloon, said “robo fatigue” has further slowed the hiring process.
“We hear from employers and jobseekers all over the country that they are exhausted from the AI application rat race, where jobseekers leverage AI applications to apply to hundreds of jobs on their behalf, and companies deploy AI software to analyze and respond to applications,” Mr. Crapuchettes said. “It could be that a lot of talent is stepping out of the workforce as a result of this trend.”
Other stress points include fuel price surges caused by Middle East conflicts.
“Since the Iran war started, cumulative price increases have outpaced earnings growth,” said E.J. Antoni, an economist at the Heritage Foundation.
Jay Adelbert, chief growth officer at the consulting firm International Services Inc., noted that long-term unemployment rates have increased over the past year.
“If you already have a valuable job, you’re relatively secure,” Mr. Adelbert said. “If you’re looking for one, the market is considerably tougher.”
Future trends
Most analysts insist the job market is showing signs of improvement, despite technology-driven changes and recent hiring slowdowns.
The National Federation of Independent Business reported that its Small Business Optimism Index rose 2.1 points in June to 97.4, reversing two straight months of decline and nearing its 52-year average of 98.
Cardiff, a business financing firm that serves many construction and contracting firms, estimates that lenders have extended a record level of credit to small businesses this summer.
“More importantly, credit quality has not deteriorated at all,” said Dean Lyulkin, Cardiff’s CEO. “In my experience, that combination is the single most reliable leading indicator of hiring there is, because a business owner does not borrow to grow unless the cash flow is already there.”
He described the job market as “better than the headline job counts suggest,” and insisted it is improving.
“I would push back hard on anyone calling it weak,” Mr. Lyulkin added. “Fluctuations in the labor market are common during economic expansions.”
Peter Earle, a senior economist at the free-market American Institute for Economic Research, noted that 1.04 job openings exist for every unemployed worker.
“Demand and supply are now approximately balanced, far below the extreme tightness of 2021-2022,” Mr. Earle said. “The break-even pace of hiring may have fallen toward 50,000 jobs per month because the working-age population is growing slowly.”
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