The flashing warning signs in the June jobs report

The June jobs report is out, and while most stories are likely to focus on the headline numbers — largely unchanged since last month — some worrying signs are appearing deeper down in the data.

Total nonfarm employment rose by 147,000, a modest gain that beat Wall Street's expectations and kept the unemployment rate at 4.1%. Beneath the surface, however, the labor market looks to be flashing early signals of structural strain, particularly for white-collar workers and workers of color.

White-collar demand is flatlining

Hiring in professional and business services, along with information, finance, and retail, was flat — and in some cases worse than flat. Professional and business services shed 7,000 jobs in June, and wholesale trade lost another 7,000. While this hardly amounts to mass layoffs, it does reflect a broader white-collar freeze — and now, early signs of contraction — emerging just as CEOs begin speaking more openly about AI-driven workforce reductions.

As The Wall Street Journal reported this week, “CEOs are no longer dodging the question of whether AI takes jobs. Now they are giving predictions of how deep those cuts could go.”

Ford’s CEO Jim Farley put it bluntly when speaking at the Aspen Ideas festival last week: “AI will replace literally half of all white-collar workers in the U.S.” Farley’s comments echo Dario Amodei, CEO of the AI firm Anthropic, who grabbed headlines in recent months with his prediction that unemployment could spike as high as 20% in the years to come as AI eliminates up to 50% of entry-level white-collar positions.

This reading of the data from the Bureau of Labor Statistics also tracks with private-sector analysis: Comerica’s chief economist Bill Adams described the report’s headline numbers as “flattered” by seasonal quirks in government and education hiring, while white-collar categories showed “minimal gains or outright losses.”

Black unemployment rises, along with long-term unemployed totals

At the same time, the June report shows the Black unemployment rate rising to 6.8%, even as joblessness for white workers fell. The number of long-term unemployed also jumped by 190,000, and “discouraged workers” — those who have given up looking for jobs — surged by 256,000 year-over-year. These metrics often rise late in a downturn, not early.

Another potential red flag: The average workweek shrank slightly in June. That means that, in aggregate, employees are clocking fewer hours, suggesting firms may be modestly scaling back workloads even if they’re not cutting headcount yet. Wages rose by a modest 0.2% month over month — a sign that worker bargaining power may be slipping, especially as hiring stalls.

A dicey political backdrop

The data has come as President Donald Trump once again berates Federal Reserve Chair Jerome Powell to lower interest rates or "resign immediately." However, Powell has said he believes the labor market remains strong overall and reiterated a "wait and see" approach to any rate cuts.

It's a gridlock that, so far, shows little sign of changing.