Unemployment Data Show the Labor Force Shrinking Across Communities

The big economic story of President Trump’s second term has been inflation, but the news around unemployment has not been good either, as we have noted on this site. The latest data from March do nothing to assuage those concerns.

Unemployment in March 2026 was up nationally and in six of the American Communities Project’s 15 community types compared with March 2025. But, perhaps more to the point, the number of people who were “employed” in the same data dropped in all 15 community types and fell by more than 750,000 nationally.

On the whole, the unemployment data continue to reveal uncommon patterns at the community-type level, similar to what we have seen in recent months. The increases and decreases in unexpected places suggest an economy that is following different rules than it has in the past.

The Numbers

At best, the March county unemployment data are a mixed bag. Four community types saw declines in unemployment compared with March 2025. Six saw increases. And the other five were flat. (County-level data should be compared with the numbers from the same month in the previous year because they are not “seasonally adjusted.”)

What’s interesting in the data, however, is the diversity of places where numbers are rising and falling. There is not an obvious pattern.

The places that saw unemployment declines were a mix of rural (Evangelical Hubs, Hispanic Centers, and Rural Middle America) and suburban (Middle Suburbs). And they are generally from different geographic regions of the country.

Furthermore, some of the declines, such as those in Hispanic Centers, may be about other factors, such as immigration enforcement. There was a big drop in the broader labor force figures in those communities.

Meanwhile, the places that saw increases in unemployment were also an odd collection of types: the high-income, well-educated Urban Suburbs, but also the rural African American South communities that tend to have fewer college degrees. The Military Posts and LDS Enclaves experienced jumps, while the biggest increases were in the Native American Lands and Graying America.

There is nothing that really unites that set of communities and, as we have noted in the past, the Urban Suburbs have tended to be more resistant to weak economies in the past. In the usual pattern in unemployment, we would more likely see increases in the Big Cities slightly spilling over into the Urban Suburbs.

The consistent unemployment increases in the Urban Suburbs may raise questions about the impact of artificial intelligence on some lower-level white-collar jobs.

Fewer People Working

But even with the unemployment increases in some community types and decreases in others, the bigger finding in the county unemployment data from March 2026 compared with March 2025 is that fewer people are working in every ACP community type.

That suggests that even the good news in the March numbers could be complicated. The decreases in unemployment may be related to a decrease in the labor force numbers — the number of people actively seeking work. The labor force shrunk in 13 of the 15 community types in March 2026 compared with March 2025. The only two where it did not shrink: the African American South and Working Class Country.

To be clear, the March unemployment numbers are not bad, historically speaking. Hispanic Centers and Native American Lands are the only community types where the unemployment rate is above 5%. The others are mostly in the range of 3.9% to 4.5%.

But the numbers here are not markedly better than last year in any of the types. Even in the Middle Suburbs, where the unemployment rate fell by 0.2 points, the numbers for the labor force and the employed people declined. In other types, the picture is worse.

It’s a complicated story that needs more study in the coming months, but at the very least, the March 2026 data show a job market in flux and trying to find its footing as inflation and gas prices rise in the broader economy.