Why the Labor Market Isn’t As Good As It Seems

I had a conversation with a client last yesterday. She’d seen the May jobs report. 172,000 jobs added. Unemployment at 4.3 percent. She felt confused. The economy seemed fine. But it didn’t match her experience of losing her twice in the past 8 months and the difficulty in finding employment for the first time in 10 years.

I told her the headline was real. But I also said there’s a version of the labor market underneath that number that tells a quieter, more uncomfortable story.

There Are Six Ways to Measure Unemployment. We Only Talk About One.

The Bureau of Labor Statistics publishes six different measures of labor market health every single month. The one you see on the news, currently 4.3 percent, is the narrowest possible version. It counts only people who are actively job hunting. That’s it.

The other five measures paint a broader picture. They include workers who’ve stopped searching but still want a job. Workers who gave up because they believe no one would hire them. Workers who needed 40 hours a week, but could only find 20. When you roll all of that together, the broadest measure — the U-6 — is sitting at 8.1 percent right now. Nearly double the headline.

That’s not a conspiracy. It’s published on the same government website as the 4.3 percent number. Most people just don’t know to look. Most depending your news source, it may not even get reported.

This Has Happened Before

I think back to 2010 and 2011 a lot when I look at the current data. The recession was officially over. The Dow was recovering. Monthly job numbers were improving. But the U-6 stayed elevated for years. Workers were stuck in part-time jobs they didn’t choose. Long-term unemployment (counted as being out of work for six months or more) remained high long after the headline rate had dropped.

The headline and the lived experience were on different tracks. Sound familiar?

What’s striking to me about the current moment is the speed of deterioration on the long-term side. Workers unemployed for 27 weeks or more are currently running 44 percent above pre-pandemic levels.

That’s not a pandemic hangover — it started rising in mid-2025, after being nearly back to baseline in 2024. And inflation-adjusted wages have fallen over the past year, so even the workers who kept their jobs are taking home less in real terms.

What We’re Watching and Why It Matters for Your Portfolio

I want to be clear: one jobs report doesn’t change a financial plan.

But the labor market is a leading indicator for things that do affect your portfolio. Consumer spending. Corporate revenue. Credit conditions. Interest rate expectations. A consumer economy where more workers are underemployed, wages are eroding, and long-term unemployment is rising is a different environment than one where everything is as rosy as the headline suggests.

We’re not making dramatic moves based on this. We are factoring it into how we think about cash reserves, fixed income positioning, and the overall resilience of plans built around assumptions from a stronger economy.

If your financial plan hasn’t been stress-tested for a softer consumer environment, now is a reasonable time to do that.

The data isn’t alarming. But it deserves more than a headline. If you want to talk through what this means for your specific situation, I’m always happy to connect.

Schedule a 30-minute call here.

As always, keep calm and invest.

Nirav

Risk Disclosures: This general information is not to be considered investment advice. Past performance is no guarantee of future results.