Employment in the U.S. increased by 569,000 in August up to 162.7 million, according to the household survey published by the U.S. Bureau of Labor Statistics, while the unemployment rate held steady at 4.1 percent as the Congressional midterms rapidly approach in November, with elections for the entire House of Representatives and for one-third of the Senate.
But the story of labor markets right now may not be as political as it appears. It continues to reflect the nation’s aging demographics as the Baby Boomer retirement wave grinds on.
The employment level is still down 1.246 million from its December 2025 peak of 163.99 million, and only the second increase of the year, but it shows continued resilience in the U.S. workforce while inflation remains a going concern. With labor markets heating up — along with oil and gas prices — Wall Street has begun pricing in the possibility of an interest rate hike to quell demand.
Besides increasing food and energy supplies to reduce costs, the other thing that can impact prices — and eventually labor markets — is controlling the supply of money. The go-to mechanism of the Federal Reserve is interest rates. When banks have to pay more to borrow from the Fed and to lend to each other, higher interest costs get passed onto consumer credit, which slows spending and prices.
That usually happens at the end of the economic cycle, as disinflation eventually gives way to higher unemployment and a slowdown or recession.
Interestingly, in August, the unemployment level increased 115,000 as well, back to 7 million. That’s still below its previous high of 7.78 million in November 2025.
Since the end of 2025, both employment and unemployment have been moving in downward directions for the year as the civilian labor force itself has shrunk 1.72 million to 169.77 million, and the participation rate from 62.5 percent in November 2025 down to 61.6 percent today. That occurred as seniors not in the labor force increased 1.6 million to 53.1 million.
That’s the churn of the Baby Boomer retirement wave that has been well underway for 15 years. Back in 2011, the civilian labor force participation rate was over 64 percent, now down to 61.6 percent, and there were only 30.9 million seniors not in the labor force, with and without a disability, now up and additional 22.2 million to 53.1 million. Another 12.1 million seniors are still in the labor force — making a total of about 65.2 million seniors.
By 2030, all of the Baby Boomers will have reached retirement age, which, besides the collapse of birth rates, completes one of the most massive demographic shifts in modern American history.
Meaning, while the number of seniors has been skyrocketing, there are relatively fewer younger Americans entering the labor force, hindering economic growth and dramatically expanding entitlement spending — all for very non-political reasons. And that will be true regardless of which party wins the elections in 2026, 2028 and beyond. As usual, stay tuned.
Robert Romano is the Executive Director of Americans for Limited Government Foundation.
