By Howard Schneider
WASHINGTON, Oct 5 (Reuters) – US President Donald Trump and his Republican Party will carry a 4.2% unemployment rate into the congressional elections in early November, a low number by historical standards and in line with what most economists would regard as full employment.
In other words, a hallmark of a solid US job market.
Yet many US voters don’t see it that way, with polls giving poor marks to Trump and Republicans on the handling of the economy.
For starters, this job market is not like the boom after the COVID-19 pandemic, and the leverage workers once had to job-hop for higher pay has disappeared. Inflation is offsetting wage gains, and tougher immigration rules and deportations mean the size of the workforce — the foundation of economic growth — has stagnated. The economy is still adding jobs, but at a much slower pace.
Here’s a look at some of the latest US job market dynamics in the wake of the Labor Department’s release on Friday of the employment report for September, the last such scorecard to be released before Americans vote in the midterm elections on November 3.
LOW UNEMPLOYMENT
The low jobless rate has been a mainstay of US economic resilience. Excluding the quick spike and rapid recovery during the pandemic, the unemployment rate has been at or below 4.5%, a level at least near what might be considered full employment, since around 2017. By that measure, this era rivals the post-World War Two rebound of the 1950s and the tight labor markets of the 1960s.
One reason household spending is holding up despite persistently elevated inflation is simple: People are working.
LABOR FORCE CHALLENGES
From the early 1960s, between immigration, population growth and the movement of women into the workforce, the US enjoyed a steady, decades-long expansion in the number of people wanting a job, a key pillar of economic growth. The streak was broken by the 2007-2009 financial crisis and recession, when unemployed immigrants returned home and others became discouraged.
The workforce now faces pressure from population aging, low birth rates and the impact of Trump’s immigration crackdown. Though it has risen in the last couple of months, it remains below the record 171.5 million people who were either working or looking for a job as of November 2025.
FEW LAYOFFS, BUT SLUGGISH HIRING
In the wake of the pandemic, companies scooped up workers at a historically fast rate, while a high “quits rate” showed workers jumping from job to job for higher pay. That dynamism has disappeared. Firms have been slow to lay off workers, and workers are more likely to remain in place. Unemployment claims have remained at low levels, but companies have also been slow to hire.
That changing environment helps to explain a survey last month from the Conference Board that showed a smaller share of people saying jobs were plentiful while the share saying jobs were hard to get rose to the highest level since January 2021 — the final month of Trump’s first term in the White House. The same survey put the Consumer Confidence Index at a 12-year low.
MIXED RESULTS FOR MANUFACTURING EMPLOYMENT
Trump based his 2024 presidential campaign on a plan to use steep tariffs and deregulation to expand manufacturing jobs in an effort to restore opportunity for the middle class in areas of the country hit hardest by the migration of goods production overseas.
But partly because of rising productivity — a good thing — manufacturing employment in the US has been declining for nearly half a century. It peaked in mid-1979 at around 19.5 million jobs and at the time accounted for more than one in five payroll positions. Despite some modest recent growth, the current total of 12.6 million jobs is still about 21,000 below the number of manufacturing jobs Trump inherited from former President Joe Biden in January 2025. It’s even further off the recent peak of 12.9 million hit midway through Biden’s presidency.
The Trump administration’s aggressive tariff policy may have caused a lot of disruption, but so far has done little to shift hiring patterns that remain tilted in the US toward the needs of an aging population, a reminder of how hard it is to mold outcomes in an open, roughly $33 trillion economy.
INFLATION ERODES WAGES
The bottom line for working households is that jobs are available, but the payoff, for many, amounts to treading water.
Recent year-over-year growth in inflation-adjusted after-tax income — the money people have to spend and save — has been modest and mired below 2%. The unemployment rate may be low, but that has coincided with relatively sluggish wage growth, a possible offshoot of increased automation, capital investment and strong corporate profits. Annual real disposable income growth of 3% was more typical in prior years.
(Reporting by Howard Schneider;Editing by Dan Burns and Paul Simao)
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