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Hiring is picking up after last year’s deep freeze—but it’s a cautious recovery, not a surge.
The American labor market is showing signs of life. After months of near-stagnation in 2025, employers added an average of 114,000 jobs per month this year. That’s a meaningful improvement over last year’s anemic average of just 10,000 monthly additions. May brought 172,000 new jobs across sectors, including leisure and hospitality, construction, manufacturing, local government, and health care.
Still, no one is calling this a boom. It feels more like a slow thaw after what my colleague Rogé Karma aptly dubbed the “Big Freeze.” Unemployment stayed relatively low last year (around 4.3 percent), but hiring was painfully sluggish—the slowest pace since the early pandemic. The labor market is now transitioning into a new, more normal phase, though growth remains moderate.
What Caused the Freeze?
Several factors likely contributed to 2025’s hiring slump. The Trump administration’s aggressive immigration enforcement led to hundreds of thousands of deportations and sharply reduced net migration. The Congressional Budget Office estimated net migration at just 410,000 for the year—roughly one-fifth of prior projections. Fewer people entering the workforce helped keep unemployment low even as job creation slowed.
Policy uncertainty played a role, too. Rapid shifts in tariff policy left many businesses in “wait-and-see” mode. Employers monitored an unpredictable environment before committing to new hires.
Signs of a Thaw
That hesitation appears to be easing. Unemployment has now remained below 5 percent for roughly five years. Health care continued adding jobs steadily in 2025, thanks to an aging population, but it’s no longer the only game in town. Recent gains are more broadly distributed.
Economists point to a few possible drivers of the pickup:
- The immigration crackdown’s impact on hiring may have reached its peak (“bottomed out”), even as deportations continue.
- Tax breaks from last year’s One Big Beautiful Bill Act are starting to give businesses more breathing room to expand payrolls.
- Tariff uncertainty has receded following the Supreme Court’s February ruling.
- Ongoing enthusiasm around AI advancements is boosting investment and confidence.
Falling energy prices—linked to signals that the war in Iran may wind down—could provide further tailwinds. As Guy Berger of the Burning Glass Institute noted, there’s “a lot more certainty” in the outlook, and nothing on the immediate horizon appears likely to derail modest job growth.
The Bigger Picture
These numbers represent a welcome course correction after the post-COVID hiring frenzy and last year’s slowdown. They are not, however, evidence of a new “golden age.”
Consumer sentiment remains weak despite record stock market highs. Inflation is running hotter than it has in years, and wage growth has been relatively modest. The Federal Reserve signaled yesterday that it may need to raise interest rates in the future to keep inflation in check, though rates are unchanged for now.
President Trump celebrated the May jobs report with characteristic enthusiasm (“IT’S RAINING JOBS”), despite previously dismissing similar federal data as rigged when it didn’t suit him. The figures do hand him a political boost at a time when many Americans remain dissatisfied with his handling of the economy.
Ultimately, the labor market’s gradual improvement is an encouraging signal—but only one piece of a complex economic story. The thaw is real, yet the recovery feels measured and fragile.