Increasing Labor Market Challenges

GORDON REPORT, August 2025
By Edward E. Gordon, Imperial Consulting Corporation

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Employment volatility and chaos continues across all business sectors. This trend will continue into the foreseeable future due to uncertainty about how tariffs and other shifts in government policies will influence the economy.

Employers have pulled back some hiring and laid off some workers. However, the lack of sufficient educated/skilled labor persists. A National Federation of Independent Business survey (7/23/25 found that 33 percent of businesses reported job openings they could not fill. Twenty-nine percent had openings for skilled labor.

The Bureau of Labor Statistics (BLS) JOLTS June release reported that about 500K manufacturing jobs, 1.1M professional and business service jobs and over 1.6M health-care positions were vacant.

The most recent BLS employment report (8/1/25) signaled employment troubles due to downward revisions in the May and June employment numbers. The President responded by firing the BLS Commissioner. He claimed, without any proof, that the numbers are being politically manipulated. The BLS has experienced difficulties in gathering data due in some part to deportations and tariff shifts, but this action suggests that shooting the messenger will solve them.

This move and the potential politicalization of future BLS reports will further erode trust in U.S. government statistics. Without impartial, dependable data on wages, inflation, and other aspects of the U.S. economy, policymakers, investors, and businesses both domestic and foreign will find decision-making more difficult. How can businesses hire or invest if because of uncertain tariffs and economic data, they don’t know what the costs of goods or services will be, or from which sources they will be able to buy at competitive prices?

On another important job-related front, a recent Korn Ferry survey (7/29/25) on AI reported that about 80 percent of U.S. companies said that this technology is a top priority in their current business strategy.

Rather than just focusing on using AI for labor cutbacks, firms also need to concentrate on upskilling their workers to create strong human-AI partnerships that will better spur innovation and growth. Every business must carefully consider what skills, roles and functions AI can replace and which ones it should not.

AI can synthesize large amounts of data, but the quality and relevance of the data is crucial. People, therefore, need to grow their abilities to analyze and evaluate both information sources and AI output. Contrary to what AI promoters claim, human possession of these skills will never become irrelevant and will play a vital role in the growth and prosperity of businesses and organizations and the overall health of the U.S. economy.