The Hidden Volatility Behind America’s “Stable” Unemployment Rate

A new study conducted by Levine AND Wiss reveals that while the national unemployment rate appears steady at 4.2 percent, the underlying labor market tells a far more volatile story. More than 744,000 jobs were cut in the first half of 2025 alone, marking the highest six-month total since the early days of the COVID-19 pandemic. The study highlights how government restructuring, global trade tensions, and sector-specific downturns are reshaping the workforce in ways that the headline unemployment rate fails to capture.

National Stability Masks Regional Instability

The Bureau of Labor Statistics reports a national unemployment rate of 4.2 percent. Yet, state-level data shows wide disparities:

• California has the highest unemployment rate at 5.4 percent.

• South Dakota enjoys the lowest at 1.8 percent.

• Mississippi saw the largest year-over-year increase, up 1.1 percent.

• Indiana recorded the largest decrease, down 0.6 percent.

These figures reveal that while the national average suggests stability, certain states are experiencing acute stress. The East and Southeast, for example, saw layoffs rise 220 percent year-over-year, underscoring how regional economies are diverging sharply.

The Scale of Job Cuts in 2025

The study emphasizes that 744,308 jobs were cut in the first half of 2025, a staggering figure that rivals the pandemic’s early disruption. Yet unemployment rates have remained within a narrow band of 4.0 to 4.2 percent. This paradox is explained by simultaneous job creation in healthcare and social assistance, which added 73,000 jobs in July 2025, offsetting losses in other sectors.

Sector-Specific Layoffs

The study identifies several industries driving the surge in job cuts:

• Federal restructuring (DOGE): Nearly 287,000 jobs lost, affecting agencies such as Health and Human Services, Education, and USAID.

• Finance: More than 154,000 layoffs, tied to tariffs and global trade disruptions.

• Retail: 80,000 jobs lost, a 255 percent increase compared to the first half of 2024.

• Nonprofits: 17,000 layoffs, a 407 percent year-over-year increase.

• Tariff-related losses: 2,000 jobs cut due to foreign import restrictions.

This sectoral breakdown shows how policy decisions and global economic shifts are directly reshaping employment.

High-Profile Corporate Collapses

The study also highlights high-profile corporate casualties:

• Microsoft cut 9,000 jobs in its second major round of layoffs in 2025.

• 23andMe, Del Monte, and At Home filed for bankruptcy, triggering widespread job losses.

These examples demonstrate that both federal institutions and private corporations are vulnerable to the same economic pressures.

Demographic Disparities

Unemployment is not evenly distributed across demographics.

• Teenagers face disproportionately high unemployment, often the first group affected during downturns.

• Black workers also experience higher unemployment rates, reflecting systemic disparities in job accessibility and security.

• Long-term unemployment rose by 179,000 in July, bringing the total to 1.8 million, or nearly 25 percent of all unemployed workers.

These disparities highlight how economic volatility disproportionately harms vulnerable groups.

Legal and Economic Implications

The study notes that layoffs tied to government restructuring and global trade policies often create legal uncertainty. Workers may have claims under the WARN Act, or in cases of discriminatory layoffs. Understanding the legal landscape is critical for those affected.

Conclusion

The study conducted by Levine AND Wiss concludes that America’s labor market is far less stable than the headline unemployment rate suggests. With more than 744,000 jobs lost in six months, regional disparities widening, and vulnerable demographics disproportionately affected, the U.S. faces a hidden employment crisis that demands closer scrutiny.