June Jobs Report: Unemployment Falls, But Not for a Good Reason
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Start with why the unemployment rate dropped. It wasn’t because more people found work. BLS data show the labor force shrank by 720,000 in June, and the number of people not in the labor force rose by 832,000. The participation rate fell to 61.5%, down 0.3 points from May. When people stop looking for work, they’re no longer counted as unemployed, so the rate can improve even while hiring stays soft. The drop reflects a shrinking labor force, not stronger hiring.
The 57,000 jobs added did come in above the 36,000 average of the prior 12 months, so this isn’t a stall. It’s a narrow gain concentrated in a few places. Professional and business services added 36,000, social assistance added 25,000, and health care added 22,000, though health care’s gain was slower than its 38,000 average over the past year. Leisure and hospitality lost 61,000 jobs on weak seasonal hiring and is now flat for the year, a sector that usually hires fast and hires often, sitting still.
The number I’d watch is long-term unemployment. People jobless for 27 weeks or more now make up 27.3% of all unemployed workers, up 286,000 over the past year. Two years ago, at the tight-market low in early 2023, that share sat closer to 18%. It’s nowhere near the 45% peak the country saw in 2010, but the direction is the wrong one, and it tells you something the headline number doesn’t: people who lose a job right now are staying out of work longer before they land the next one.
Then there are the revisions. April’s job count was revised down by 31,000 and May’s by 43,000, a combined 74,000 fewer jobs than first reported. Two straight months of downward revisions mean the early prints have been running warmer than reality, a pattern I flagged when I previewed this same slowdown yesterday using the ADP and Challenger data ahead of today’s official release. Average hourly earnings did rise 0.3% to $37.64, up 3.5% over the year, so wage growth is holding even as job growth cools.
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An AI Spending Spree Is Costing Experienced Workers Their Jobs at Microsoft
Microsoft is reportedly planning to cut thousands of jobs, and it’s doing it to free up money for artificial intelligence. Business Insider first reported the plan, and MarketWatch confirmed Microsoft’s roughly 220,000-person workforce would see a reduction under 2.5%, or somewhere under 5,500 people, with an announcement expected as soon as next week. Microsoft declined to comment on the report.
The roles most likely to go aren’t the ones people usually picture in a tech layoff. Consulting, sales, and the Xbox gaming unit are the divisions named, according to the report, meaning experienced, client-facing, well-paid employees, the kind of workers who used to sit further from the layoff line than engineers or support staff. Some of those affected will reportedly be offered other roles inside the company.
The money being freed up is going toward a $190 billion commitment to AI infrastructure for 2026. At the same time, investors have started to question whether that spending is paying off. Microsoft’s stock has fallen sharply over the past month, wiping out hundreds of billions of dollars in market value, as Wall Street waits for AI revenue to catch up to AI capital expenditure.
This isn’t Microsoft’s first round. The company cut 10,000 jobs in January 2023, another 9,000 last July, and 6,000 two months before that. Meta and Amazon have run similar cuts as they shift spending toward AI infrastructure of their own, a pattern I traced back to Oracle’s 21,000-job cut and the AI language buried in its own regulatory filing a little over a week ago.
Watch which jobs are getting cut here, because it tells you where a company thinks its value is going. When a business sitting on a near-$3 trillion valuation trims consulting and sales roles to fund server farms, it’s saying the return on a data center currently beats the return on a salesperson. I’d be careful calling every layoff like this an “AI replacement” story, since a chunk of any large cut is ordinary belt-tightening dressed up in AI language. But the direction across Microsoft, Meta, and Amazon is real, and it’s the same trade every time: fewer people, more compute.
For anyone in a corporate consulting or sales seat right now, the read isn’t panic, it’s positioning. Stability increasingly depends on sitting close to revenue or close to the AI work itself, which tracks with what workers already told researchers about their own anxiety around this shift in Glassdoor’s midyear numbers. The safe middle of the org chart is shrinking, and June’s BLS data on rising long-term unemployment suggests that once someone in that middle loses a role, getting back in is taking longer than it used to.
For employers outside the AI capex race, this is also a sourcing opportunity. Experienced consulting and sales talent is entering the market from a company most candidates recognize by name, and that talent isn’t going to stay unattached for long in a market this competitive. If you need to move fast on filling those seats without cutting corners on fit, that’s what our staffing team is built for.
