Business

Unemployment-Related Numbers Near Historic Lows. So Why Are Americans Fearful Of Future Job Market?

A worker climbs a ladder. (Screen Capture/PBS)

Americans grew increasingly fearful about the future of the job market even as unemployment remained relatively low and new applications for unemployment benefits fell to their lowest level in nearly six decades.

Workers confronted rapid advances in artificial intelligence, repeated corporate restructurings and growing doubts about how easily they could find another job if they lost their current one. The share of Americans expecting unemployment to rise over the next year climbed in August to its highest level since the depths of the COVID-19 pandemic, according to the Federal Reserve Bank of New York.

The apparent contradiction may reflect a growing divide between what is happening in the labor market today and what workers fear could happen next, Maruf Ahmed, CEO of staffing and workforce solutions company Dexian, told the Daily Caller News Foundation.

“Relatively low layoffs and high worker anxiety can exist at the same time because they’re measuring two different things: Layoff numbers tell us what has happened, while worker anxiety is increasingly about what could happen next,” Ahmed told the DCNF.

“Employees are watching AI change how work gets done and asking whether their role, or the skills they rely on today, will still be as valuable tomorrow,” Ahmed added.

The mean probability Americans assigned to the unemployment rate being higher a year from now rose to 44.4% in August, up 1.6 percentage points from July and the highest reading since April 2020, according to the New York Fed.

Actual unemployment, meanwhile, remained at 4.1% in August as employers added 162,000 jobs, according to the Bureau of Labor Statistics.

Applications for unemployment benefits were also historically low. Initial claims fell to 187,000 during the week ending July 18, their lowest seasonally adjusted level since September 1969, before rising to 197,000 during the week ending Sept. 19, according to the Department of Labor.

The combination resembles what economists have described as a low-hire, low-fire labor market: workers already holding jobs are relatively unlikely to lose them, while those attempting to enter the workforce or switch employers can face a more difficult search.

Brad Hershbein, a senior economist at the W.E. Upjohn Institute for Employment Research, said weak worker confidence can coexist with relatively healthy headline labor statistics because workers are responding to a broader set of pressures than layoffs alone.

“If I had to summarize, I would say that many workers do not see people like them getting ahead or advancing, even as costs rise, and that understandably depresses worker confidence,” Hershbein told the DCNF.

Hershbein pointed to cumulative inflation, pay that has failed to keep pace for some workers and higher borrowing costs as additional sources of pressure. He also said uncertainty surrounding AI is contributing to anxiety even where immediate job losses remain limited.

Nearly seven in ten workers surveyed in Dexian’s 2026 Work Futures research said they were concerned AI and automation could affect their job security or career prospects, according to Ahmed.

Separate Federal Reserve research found similar unease. The share of workers concerned about personally losing their job to AI roughly doubled from 5% at the end of 2024 to just over 10% at the end of 2025, according to research published in September by the Federal Reserve Bank of Boston. Roughly 60% expected AI-related layoffs or a decline in the number of workers employed in their industry.

AI already appeared in corporate layoff announcements. Employers attributed 116,175 planned job cuts to AI through August, representing roughly 22% of all announced in 2026, according to Challenger, Gray & Christmas.

Hershbein said the anxiety surrounding AI extends beyond fears that the technology will directly eliminate jobs. Workers are also confronting the speed at which companies are adopting the technology and uncertainty about how it will reshape their workplaces and career prospects.

Corporate restructuring added another source of uncertainty. Companies have cut jobs, reorganized divisions and redirected resources toward AI even while continuing to invest heavily in their businesses. Oracle, for example, increased the expected cost of its fiscal 2026 restructuring plan by $700 million, bringing anticipated costs to roughly $2.8 billion as the company cut jobs and terminated contracts while ramping up AI spending, Reuters reported.

Microsoft also launched another round of layoffs in September, cutting roughly 500 jobs primarily in its Xbox division after eliminating about 4,800 positions in July. The latest restructuring also affected the company’s cloud and AI operations, according to Business Insider.

Hershbein said corporate restructuring was likely contributing to worker unease but appeared to be a smaller driver than broader concerns over costs, advancement and AI.

The broader layoff picture remained less severe. U.S. employers announced 529,914 job cuts through August, down 41% from the same period in 2025, while employers announced plans to hire 119,825 workers, up 37% from the prior year, according to Challenger, Gray & Christmas.

Workers nevertheless appeared less confident about their ability to recover from a potential job loss. Americans placed the probability of finding another job after losing one at 45.4% in August, slightly below its trailing 12-month average, according to the New York Fed.

The anxiety was particularly visible among younger Americans entering the workforce. The unemployment rate for recent college graduates remained elevated at about 5.6% during the second quarter of 2026, while the underemployment rate edged up to 42%, according to the New York Fed.

Hershbein said the low-hire, low-fire environment is particularly damaging for young and early-career workers because they can miss opportunities to land strong first jobs that shape earnings and career progression years later.

New Census Bureau research released in September found employment outcomes deteriorated particularly sharply for graduates from majors most exposed to AI. Graduates in the most AI-exposed tenth of college majors saw their likelihood of initial employment decline by five percentage points after ChatGPT’s introduction, while their initial full-quarter earnings fell 13%.

Other research suggested AI was only part of the problem. Job postings available to the Class of 2026 were 12% below pre-pandemic levels, while the share of graduating seniors describing themselves as pessimistic about the job market rose to 62%, according to Handshake.

The economic frustration among younger Americans unfolded alongside changes in political behavior. Young and college-educated voters in dense urban areas formed a core bloc for several candidates aligned with the socialist left during the 2026 primaries. Eighty percent of DSA members age 25 or older held bachelor’s degrees while 45% reported household incomes below $60,000, citing the organization’s most recent membership survey.

Distrust extended beyond the labor market. Just 27% of Americans on average expressed “a great deal” or “quite a lot” of confidence in 14 major American institutions in 2026, only one percentage point above the record low, according to Gallup. Twelve of the 14 institutions were at or near their long-term lows.

Younger Americans entered adulthood facing housing costs that pushed traditional economic milestones further out of reach. The median age of a first-time homebuyer reached a record 38 in the National Association of Realtors’ 2024 survey, up from 35 the prior year, while first-time buyers fell to a record-low 24% of all purchasers, according to the National Association of Realtors.

Ahmed said employers may be unable to guarantee stability as technology changes workplaces, but argued that giving employees a clear path to develop new skills could alleviate some of the uncertainty. Some 72% of workers surveyed by Dexian said improving their skills could lead to higher pay, advancement or more interesting work.