The US labor market is facing a large‑scale shortage of labor force. Barclays’ analysts warn that official aggregate data hides the real problem. Analysis of macroeconomic data shows that since the start of 2026, the US labor supply has been shrinking by about 100,000 people per month on average.
The main causes of the labor shortfall are demographics and policy. Tough immigration measures and deportations have almost eliminated the inflow of foreign workers who were previously a key source of hiring. At the same time, the native population is aging and retiring. A behavioral factor compounds the problem: an increasing number of Americans are deliberately opting out of employment in order to care for their homes and families, openly stating they do not want to look for a job.
For the Federal Reserve, this implies a chronic problem. A structural labor shortage will sustain strong tightness in the market and continue to push wages upward. Barclays concludes these trends are irreversible. In the near term, the US economy will have to adjust to a paradoxical reality: even zero growth in new jobs will be considered sufficient to keep the unemployment rate stable.
