The August 2025 employment data from the Bureau of Labor Statistics (BLS) shows a cooling labor market, with slower payroll growth, rising underemployment, and a shift in hiring patterns that staffing firms should be paying close attention to.
Key Takeaways from the August Employment Situation
Payrolls slowed sharply: Nonfarm payrolls rose by just 22,000, well below economist forecasts.
Sector leaders: Healthcare (+30,600) and Retail Trade (+20,800) led job growth.
Federal jobs declined: The Federal Government cut 15,000 positions.
Hiring mix stable: No significant change between full-time and part-time hiring.
On the surface, the numbers suggest a sluggish month, but the deeper measures tell an even more important story.
JOLTS Report: Openings Continue to Decline
The July 2025 Job Openings and Labor Turnover Survey (JOLTS) confirmed softening demand:
Job openings fell to 7.2 million (down from 7.4 million in June).
Hires held steady at 5.3 million.
Separations, quits, and layoffs all remained unchanged.
This stability in hires alongside declining openings signals that employers are pulling back on new postings while maintaining current staffing levels.
Why the U6 Matters for Staffing Firms
While the U3 (headline unemployment) is the most commonly cited figure, the U6 rate is often a better predictor of staffing dynamics.
U3 (headline): Counts only active job seekers.
U6 (broader measure): Includes discouraged workers, involuntary part-time workers, and marginally attached workers.
In August, U6 ticked up by 0.2% to 8.1%, a sign that more workers are struggling to find stable, full-time roles.
How Rising U6 Impacts Staffing
Job seekers less selective: More willing to accept contract/temporary roles to maintain income.
Bridge employment: Temp jobs keep résumés active until permanent roles return.
Skill signaling: Contract work prevents gaps and builds credibility.
Employer strategy: Companies lean on flexible staffing during uncertainty rather than committing to permanent hires.
Historical context: During the Great Recession, U6 surged to nearly 17%, and temporary staffing rebounded faster than overall employment. Firms like Madison Resources and Damian Services saw business growth before the broader recovery fully took hold.
Additional Labor Market Metrics
Prime-age labor force participation (25–54): Rose 0.3% to 83.7%.
Overall labor force participation: Up 0.1% to 62.3% (still 1.1% below February 2020).
Wages: Average hourly earnings rose $0.10 (0.3%) to $36.53. Year-over-year growth: +3.7%.
Workweek: Held steady at 34.2 hours overall; manufacturing slipped slightly to 40.0 hours.
ADP estimate: Private payrolls increased by 54,000 in August.
The Bottom Line
The August report highlights a job market losing momentum. For staffing firms, the rise in U6 suggests a growing pool of candidates more open to contract and temporary work. At the same time, employers may increasingly favor flexible hiring as uncertainty builds.
What this means:
Staffing firms are positioned to benefit as both supply (candidates) and demand (employers seeking flexibility) shift toward temporary and contract solutions.
Just as in past downturns, firms that adapt quickly could see growth ahead of the broader economy.
Sources:
Bureau of Labor Statistics (BLS), ADP, CNBC, Fox News
-Industry Employment and Output Projections to 2024
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