Econified

The Bureau of Labor Statistics (BLS) releases monthly reports on the labor market for the United States. This information is utilized by many different entities across the public and private sector to get a pulse on how the economy is performing. Generally speaking, high unemployment leads to less consumer income and spending which can have negative effects across the economy. For this reason, a lot of industries are very negatively impacted by high unemployment. Additionally, high unemployment can directly lead to decreased economic activity which results in a recession. During the Great Recession, a term used to describe the large recession resulting from the financial crisis in the late 2010s, the unemployment rate went up to a high of 10%.

Looking at the September 2025 Employment Situation from BLS, the unemployment rate rose 0.1% in September. The rate is currently at 4.4%. The unemployment rate has been slowly rising, and we are currently at the highest levels in two years. Every month since June has had an increase in unemployment of 0.1%. While that number seems small, 0.1% of the United States labor force is equal to around 170,000 workers. The total number of unemployed people in the United States is 7.6 million which is up from 6.9 million last September.

This may seem like a small number of people considering the entire U.S. population, but it is important to note that the unemployment rate only counts people who are actively looking to work. Elderly, children, and individuals not seeking employment are not included in this figure. There are currently an estimated 7.6 million people in the U.S. who want to work but cannot. The unemployment rate is then found utilizing the number of people in the labor force that do not have jobs divided by the entire labor force. To be in the labor force, an individual has to have a job or apply for employment within the last 4 weeks.

Discouraged workers are not included in the unemployment rate because they are not actively looking for employment. The BLS defines this category as individuals who believed that there were no jobs available to them, so they did not seek employment. The reported number of discouraged workers for September was 557,000 people. These individuals likely would work if jobs were available, but they are not working or applying because they do not believe there are jobs available. Because they did not seek employment in the last four weeks, they are not included in the labor force.

Breakdown of The Employment Situation

The BLS provides breakdowns on what groups are most affected by unemployment. The age range that is most affected is teenagers aged 16-19. They had an unemployment rate of 13.2% in September 2025. White Americans had the lowest rate of 3.8% while black or African Americans had the highest rate of 7.5%. In September of 2024, white Americans had an unemployment rate of 3.7% while black or African Americans had an unemployment rate of 5.7%. This is a 1.8% increase in unemployment for black and African Americans in one year. This highlights the rise in unemployment is disproportionately impacting black or African Americans. There were increases in Asian and Hispanic or Latino unemployment rates as well at 0.3% and 0.4% respectively. The BLS only provides data, so there are no definitive reasons for the disparity in unemployment increases.

Industry data is also provided to show industry breakdowns in unemployment rates. Here are the notable industry changes in unemployment from September 2024 to September 2025:

• Mining, quarrying, and oil & gas extraction: rate rose 4.8% from 2.0% to 6.8%
• Transportation and Utilities: rate fell 0.7% from 4.6% to 3.9%
• Leisure and Hospitality: rate rose by 0.9% from 5.6% to 6.7%
• Information: rate rose by 3.2% from 3.8% to 7.0%
• Government workers: rate rose by 0.5% from 1.9% to 2.4%
• Self-employed workers, unincorporated, and unpaid family workers: rate fell by 0.7% from 3.4% to 2.7%

Most industries saw minor changes, but these were some of the industries that have been more impacted this last year. A 4.8% change in mining, quarrying, and oil & gas extraction is quite significant for the industry. However, it is the smallest industry by numbers that the BLS reports on, so the change may just be more significant due to relatively small size. The 4.8% change represents an unemployment increase in that industry of 21,000 workers. The Information industry increase in unemployment by 3.2% represents an increase in unemployment by 79,000 workers. The smaller 0.9% increase in the hospitality industry represents 178,000 more workers being unemployed. This is a large industry that has had its labor hit hard this last year. Many government workers working in the federal government were given a deferred resignation offer. This offer meant that they would continue to be paid as federal employees until September 30th despite leaving much earlier in the year. This means for the September job report, they are still considered to be employed despite not working. I expect this number to jump up when looking at future months due to many efforts of the current administration to shrink the size of the federal workforce. Already, this change of 0.5% represents 113,000 more unemployed workers.

Takeaways

While increasing unemployment rates can definitely result in negative impacts on the economy, it is important to note that a 4.4% unemployment rate is fairly healthy. For example, after the unemployment rate of 4.3% in May of 2001, the rate did not drop below 4.4% again until June of 2017. This shows that there were over 16 years recently when the unemployment rate was worse than it is currently. Unemployment rates dropped in late 2021 as the economy recovered from the COVID-19 pandemic. Since the 2021 drop, rates have slowly been increasing. This 4.4% unemployment rate is the highest we have seen since October of 2021. This indicates that the economy is slowly headed in the wrong direction, but the economy is still performing at healthy levels. A key reason for this rising unemployment is likely that interest rates have been relatively high to combat inflation. Higher interest rates means that it is harder for companies to grow, which slows employment.

The Federal Reserve is meeting in December to decide whether or not to lower the interest rates. This economic data will be at the front of their mind when they decide. Because unemployment is getting worse, albeit slowly, the Federal Reserve is more likely to lower interest rates to get unemployment to stabilize or decrease. Lowering interest rates is intended to help unemployment at the risk of increasing inflation. Currently inflation is at a high level as well, so the Federal Reserve decision will not be an easy one. It is still likely to be an interest rate-cut as unemployment tends to hurt the economy long-term while inflation has mostly short-term effects. Ultimately, the labor market did get slightly worse in September compared to recent months and last year. The unemployment rate is not at a level that should raise red flags, but it will be important to monitor in the months ahead to make sure the labor market remains healthy.