WASHINGTON — The American job market, a pillar of U.S. economic strength since the COVID-19 pandemic, is crumbling.
Uncertain about where things are headed under President Donald Trump's economic policies, companies grew increasingly reluctant to hire, leaving agonized jobseekers unable to find work and weighing on consumers who account for 70% of all U.S. economic activity. Their spending was the engine behind the world's biggest economy since the pandemic disruptions of 2020.
The Labor Department reported Friday that U.S. employers — companies, government agencies and nonprofits — added just 22,000 jobs last month, down from 79,000 in July and well below the 80,000 economists expected.
The unemployment rate ticked up to 4.3% last month, also worse than expected and the highest since 2021.
People are also reading…
"U.S. labor market deterioration intensified in August," Scott Anderson, chief U.S. economist at BMO Capital Market, wrote in a commentary, noting that hiring was "slumping dangerously close to stall speed. This raises the risk of a harder landing for consumer spending and the economy in the months ahead."
Commuters walk April 8 past the New York Stock Exchange.
Alexa Mamoulides, 27, was laid off in the spring from a job at a research publishing company and hunted for work ever since. She uses a spreadsheet to track her progress and said she's applied for 111 positions and had 14 interviews — but hasn't landed a job yet.
"There have been a lot of ups and downs," Mamoulides said. "At the beginning I wasn't too stressed, but now that September is here, I've been wondering how much longer it will take. It's validating that the numbers bear out my experience, but also discouraging."
The U.S. job market lost momentum this year, partly because of the lingering effects of 11 interest rate hikes by the Federal Reserve's inflation fighters in 2022 and 2023.
But the hiring slump also reflects Trump's economic policies, including his sweeping and ever-changing tariffs on imports from almost every country on Earth, a crackdown on illegal immigration and purges of the federal workforce.
A person waits in a line Aug. 29 for a prospective employer at a job fair in Sunrise, Fla.
Also contributing to the job market's doldrums are an aging population and the threat that artificial intelligence poses to young and entry-level workers. The unemployment rate for those ages 16 to 24 rose last month to 10.5%, the Labor Department reported Friday, the highest since April 2021.
After revisions shaved 21,000 jobs off June and July payrolls, the U.S. economy created fewer than 75,000 jobs a month so far this year, less than half the 2024 average of 168,000 and not even a quarter of the 400,000 jobs added monthly in the hiring boom of 2021-2023.
When the Labor Department put out a disappointing jobs report a month ago, an enraged Trump responded by firing the economist in charge of compiling the numbers and nominating a loyalist to replace her.
"The warning bell that rang in the labor market a month ago just got louder," Olu Sonola, head of U.S economic research at Fitch Rates, wrote in a commentary. "It's hard to argue that tariff uncertainty isn't a key driver of this weakness."
Trump says his protectionist policies are meant to help American manufacturers, but factories shed 12,000 workers last month and 38,000 so far this year. Many manufacturers are hurt, not helped, by Trump's tariffs on steel, aluminum and other imported raw materials and components.
A construction worker carries steel decking July 31 at the construction site of a housing project in Portland, Maine.
Construction companies, which rely on immigrant workers vulnerable to stepped-up ICE raids under Trump, cut 7,000 jobs in August, the third straight drop. The sweeping tax-and-spending bill Trump signed into law July 4 delivered more money for immigration officers, increasing threats of massive deportations.
The federal government, its workforce targeted by Trump and by billionaire Elon Musk's Department of Government Efficiency, cut 15,000 jobs last month. Diane Swonk, chief economist at the tax and consulting firm KPMG, said the job market "will hit a cliff in October, when 151,000 federal workers who took buyouts will come off the payrolls."
Job gains last month were remarkably narrow: Health care and social assistance companies — a category that spans hospital to daycare centers — added nearly 47,000 jobs in August and now account for 87% of the private-sector jobs created in 2025.
Democrats were quick to pounce on the report as evidence that Trump's policies are damaging the economy and hurting ordinary Americans.
An employee pieces together components on an assembly line Aug 13 at GE Appliances global headquarters in Louisville, Ky.
Trump's sweeping import taxes are taking a toll on businesses that rely on foreign suppliers.
Trick or Treat Studios in Santa Cruz, California, for instance, gets 50% of its supplies from Mexico, 40% from China and the rest from Thailand, The company, which makes ghoulish masks that are replicas of such horror icons like Chucky the doll from the "Child's Play" movies as well as costumes, props, action figures and games, saw its tariff bill rise to $389,000 this year, said co-founder Christopher Zephro. He was forced to raise prices across the board by 15%.
In May, Zephro had to cut 15 employees, or 25% of his workforce. That marked the first time he's had to lay off staff since he started the company in 2009. "That's a lot money that could have been used to hire more people, bring in more product, develop more products," he said. "We had to do layoffs because of tariffs. It was one of the worst days of my life."
The weak August numbers make it all but certain that Federal Reserve will cut its benchmark interest rate at its next meeting, Sept. 16-17.
5 ways companies are incorporating AI ethics
5 ways companies are incorporating AI ethics
As more companies adopt generative artificial intelligence models, AI ethics is becoming increasingly important. Ethical guidelines to ensure the transparent, fair, and safe use of AI are evolving across industries, albeit slowly when compared to the fast-moving technology.
But thorny questions about equity and ethics may force companies to tap the brakes on development if they want to maintain consumer trust and buy-in.
KPMG's 2024 Generative AI Consumer Trust Survey found that about half of consumers think there is not sufficient regulation of generative AI right now. The lack of oversight tracks with limited trust that institutions—particularly tech companies and the federal government—will ethically develop and implement AI, according to KPMG.
Within the tech industry, ethical initiatives have been set back by a lack of resources and leadership support, according to an article presented at the 2023 ACM Conference on Fairness, Accountability, and Transparency. Layoffs at major corporations, including Amazon's streaming platform Twitch, Microsoft, Google, and X, hit employees focused on ethical AI hard, leaving a vacuum.
While nearly 3 in 4 consumers say they trust organizations using GenAI in daily operations, confidence in AI varies between industries and functions. Just over half of consumers trust AI to deliver educational resources and personalized recommendations, compared to less than a third who trust it for investment advice and self-driving cars. Consumers are open to AI-driven restaurant recommendations, but not, it seems with their money or their life.
Clear concerns persist around the broader use of a technology that has elevated scams and deepfakes to a new level. The KPMG survey found that the biggest consumer concerns are the spread of misinformation, fake news, and biased content, as well as the proliferation of more sophisticated phishing scams and cybersecurity breaches. As AI grows more sophisticated, these concerns are likely to be amplified as more people may potentially be negatively affected—making ethical frameworks for approaching AI all the more essential.
That puts the onus to set ethical guardrails upon companies and lawmakers. In May 2024, Colorado became the first state to introduce legislation with provisions for consumer protection and accountability from companies and developers introducing AI systems used in education, financial services, and other critical, high-risk industries.
As other states evaluate similar legislation for consumer and employee protections, companies especially possess the in-the-weeds insight to address high-risk situations specific to their businesses. While consumers have set a high bar for companies' responsible use of AI, the KPMG report also found that organizations can take concrete steps to garner and maintain public trust—education, clear communication and human oversight to catch errors, biases, or ethical concerns.
The reality is that the tension between proceeding cautiously to address ethical concerns and moving full speed ahead to capitalize on the competitive advantages of AI will continue to play out in the coming years.
Drata analyzed current events to identify five ways companies are ethically incorporating artificial intelligence in the workplace.
Actively supporting a culture of ethical decision-making
AI initiatives within the financial services industry can speed up innovation, but companies need to take care in protecting the financial system and customer information from criminals. To that end, JPMorgan Chase has a 200-person AI research group, including an ethics team to work on the company's AI initiatives. The company ranks top on the Evident AI Index, which looks at banks' AI readiness, including a top ranking for transparency in the responsible use of AI.
Development of risk assessment frameworks
The National Institute of Standards and Technology has developed an AI Risk Management Framework that helps companies better plan and grow their AI initiatives. The approach supports companies in identifying the risks posed by AI, defining and measuring ethical activity, and implementing AI systems with fairness, reliability, and transparency. The Vatican is even getting in on the action—it collaborated with the Markkula Center for Applied Ethics at Santa Clara University, a Catholic college in Silicon Valley, to recommend specific steps for companies to navigate AI technologies ethically.
Specialized training in responsible AI usage
Amazon Web Services has developed many tools and guides to help its employees think and act ethically as they develop AI applications. The Responsible AI course, a YouTube series produced by AWS Machine Learning University, serves as an introductory course that covers fairness criteria and methods for mitigating bias. Amazon's SageMaker Clarify tool helps developers detect bias in AI model predictions.
