U.S. — The U.S. labor force participation rate fell to 61.5% in June 2026, with 720,000 people leaving the labor force. This rate is the lowest recorded outside of the pandemic period since 1976.

Laura Ullrich, director of economics at Indeed Hiring Lab, co-authored a May 2026 report titled "The Great Mismatch: How a Shrinking Workforce, AI, and Labor Reallocation Will Define the Next 15 Years." The report projects the U.S. labor force will begin shrinking in 2026 due to immigration policy changes and the retirement of the baby boomer generation.

"There are two reasons why you might not add jobs in a month: One is there's no demand for workers, the other is there is demand, but there's not enough supply," Ullrich said. "Historically, you've been able to look at jobs numbers like what came out on Friday and say, 'okay, there was a decline in leisure and hospitality. Well, that means there's less demand for those workers.' But I think now, and more commonly as we go forward, it actually could be labor supply driving some of that."

Jerome Powell, former Federal Reserve Chair, stated that the economy was seeing "very, very low, nonexistent, really" growth in the labor force.

The Indeed Hiring Lab report estimates the labor force will decline by 3.7%, or 5.9 million workers, between 2025 and 2032. The report projects a partial recovery after 2032 and that the aggregate unemployment rate could climb by 0.5 to 3.5 percentage points by 2040. In a more severe scenario, the unemployment rate could reach nearly 8% by 2040.

"No matter what we did with AI in our model, demographics were the bigger story," Ullrich said. She noted that current investment choices are leading to increased capital expenditure. "The investment choices, the purchasing choices of firms of increasing capex spending, that's offsetting labor," she said. "That's an indirect impact of AI." Ullrich added, "I do not believe there are a lot of AI agents doing work that people used to do, yet."

Bureau of Labor Statistics data indicates that foreign-born individuals have a labor force participation rate of 66.3%, compared to 61.6% for native-born workers. The labor force participation rate for foreign-born men stands at 76.9%, while for native-born men it is 65.8%. Native-born women have higher labor force participation rates than immigrant women. Furthermore, 70.1% of foreign-born individuals are between the ages of 25 and 54, compared to 62.7% of native-born Americans.

The report also modeled an AI-disruptive scenario where the combined unemployment rate in information, financial activities, and professional business services sectors is projected to rise from 4% in 2025 to 12% by 2032. Specifically, unemployment in the information sector could reach 21.2%, financial activities 11.8%, and professional and business services 10.7% by 2032 under this scenario. "People go and study things to go work in finance or computer science because those have historically been really successful paths, and so there continues to be people trying to flow into those sectors when actually AI is impacting those first and most severely," Ullrich said. "It's a mismatch problem. In theory, AI should make the match easier, but it still creates this friction that we estimate will bring down employment."