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In fact, long-term unemployment appears to have declined for the “wrong” reasons, they said.
The number of people unemployed for 27 weeks or more — the official barometer of long-term unemployment — fell by 64,000 people from June to July, to about 1.8 million people, the Bureau of Labor Statistics said Friday.
Of all unemployed workers, 25.5% are long-term unemployed, down sharply from 27.3% in June.
“We are in this low-hire environment where people are having a really hard time,” said Cory Stahle, a senior economist at Indeed, a job site.
“We’re maybe seeing a case where people are saying, ‘I just can’t find a job, so I’m just going to stop looking,'” he said. “If I’ve been unemployed for seven, eight, nine, 10 months, at what point will I take a break from that because it’s not yielding a whole lot?”
The decline in long-term unemployment echoes the drop in the broader national unemployment rate to 4.1% in July, down from 4.2% the prior month.
“The unemployment rate fell for the wrong reasons,” Heather Long, chief economist at Navy Federal Credit Union, wrote in an analysis of the jobs report. “People continue to leave the labor force. Labor force participation is at the lowest level since February 2021.”
Evidence suggests workers have become disillusioned by the difficulty of finding a job in the current “low hire” labor market and are dropping their job search altogether, economists said.
Such workers aren’t counted as unemployed, since unemployment is a measure of the people who are jobless and also looking for work. All else equal, this makes the unemployment rate look artificially low.
“A jobless rate that falls because people stop looking for work is not the same as one that falls because people found jobs,” Jason Pride, chief of investment strategy and research at Glenmede, a wealth management firm.
The risks of long-term unemployment
A job seeker at a job and resource fair in Los Angeles, California, on July 29, 2026.
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Withdrawal from the labor force due to discouragement poses financial risks at a micro and macro level.
The long-term unemployed are generally ineligible for unemployment benefits after six months, and perhaps even sooner depending on the state.
Such people would be without their regular income from work as well as social assistance, putting financial stress on households at a time when gasoline prices and the overall inflation rate remain elevated, economists said.
Individuals also generally have a harder time finding jobs after long absences, and the long-term unemployed tend to earn less when they eventually find a new job, economists said.
Meanwhile, “it’s really hard to continue growing [the] economy if [you] don’t have the workers to support that growth,” said Stahle.
Other signs of a tough job market
Employer hiring has been muted since 2024, according to federal data. Since then, the hiring rate has hovered at its lowest levels since 2014.
Meanwhile, layoffs have been historically low, creating little churn and leaving fewer vacancies for job seekers.
Job growth has also been relatively muted.
Employers have added 26,000 jobs per month, on average, in the 12 months from August 2025 to July 2026. The average was 66,000 the prior year, and 142,000 the one before, according to federal data.
Hiring also hasn’t been broad, making it especially tough for workers outside fields like healthcare that are adding jobs with more regularity, economists said.
“Hiring displays little sense of active momentum, and with some concentrated contributions that we have highlighted in prior months (in areas like healthcare), there is some hiring happening, but it is concentrated,” Rick Rieder, head of the Global Allocation Investment team at BlackRock, a money manager, wrote in an analysis Friday.
Ultimately, it’s a good time to have a job — and not a good time to be out of one, Stahle said.
One way job seekers might find more success in the current environment is by parlaying skills in industries that are hiring at a more rapid pace right now, Stahle said.
For example, someone with information technology experience might consider looking for a job within a hospital system or elsewhere within the healthcare sector, he said.
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