Job Market Reveals Growing Risks For Marginalized Workers, And The Entire Economy

Forbes

07-08-2025

How Labor Market Inequities Threaten Long-Term Prosperity for All, What Business Leaders and Policymakers Must Do to Address the Disproportionate Impact of Job Losses
Based on the July 2025 jobs report and revisions to prior months, the softening of the U.S. job market poses growing challenges, especially for marginalized groups, exposing and exacerbating entrenched inequities.
The July report showed a troubling increase in unemployment for Black workers, with the overall Black unemployment rate rising to 7.2%, and Black women experiencing unemployment at 6.3%, their highest rates since 2021. Notably, unemployment among Black men spiked significantly from 5.2% in May to 6.9% in July, illustrating a spreading distress that often starts with the most vulnerable groups and then extends wider in the labor market. Single mothers saw unemployment rise to 6.5%, a near four-year high, highlighting a clear gendered and caregiving dimension to job loss during a weakening economy. The labor market is not only softening, but doing so unevenly — with marginalized groups less shielded from the downturn and with fewer opportunities for recovery or advancement than their counterparts.
Marginalized workers, particularly Black women and single mothers, are disproportionately affected by this downturn, compounding the 'last hired, first fired' dynamic and long-standing structural barriers. We see this acutely in this year's mass terminations among the federal workforce, which disproportionately affected probationary workers (typically newer hires), among whom women and people of color are overrepresented. For instance, women made up 72% of probationary workers in the Department of Education and 69% in Veterans Affairs, while people of color made up 65% of probationary workers in the Department of Treasury and 55% in Department of Housing and Urban Development.The loss of these jobs, and uncertainty on whether they will ever come back, given the gutting of many of these federal agencies, is a huge setback to economic equity, as public sector jobs have traditionally offered more accessible economic security and career mobility for Black communities. Compounding the issue, slow recovery in state and local government employment signals that these historically important avenues are no longer the steady pathway to middle-class life they once were.Beyond just the hit to government jobs, rising unemployment rates among marginalized groups often serve as an early warning signal for the broader economy because these workers typically occupy frontline, entry-level and lower-wage positions that are most sensitive to economic shifts. As layoffs and job losses mount in these groups, reduced consumer spending and weakened demand ripple outward, eventually impacting more privileged workers and sectors that depend on overall economic stability.In other words, when the most vulnerable among us lose ground, it is often a precursor to wider economic challenges that can disrupt prosperity across all demographics. Addressing inequities proactively not only supports communities hardest hit now, but also strengthens the resilience of the entire economy.Fortunately, there are several steps both the private and public sector can take to remedy what's already been lost, and mitigate future fallout.Business leaders should:Policymakers should:The July 2025 jobs report reveals heightened vulnerability for marginalized groups who face intersecting economic pressures, from racial disparities in unemployment to caregiving burdens exacerbating job loss. Both immediate business actions and sustained policy interventions are essential to offset the disproportionate toll, ensure equitable access to opportunity, and prevent further widening of long-term economic disparities.Whether it's frontline layoffs, public sector workforce cuts, or the steady drumbeat of rising joblessness among Black workers and single mothers, labor market trouble for marginalized groups is never just their story — it's the economy's story. These workers are often society's economic bellwethers. When their employment prospects worsen, it signals deeper fractures that, left unchecked, will eventually affect us all. Ignoring these early warning signs means not just failing the most vulnerable, but risking a broader economic downturn that harms even those who assume their jobs and finances are safe. If business leaders and policymakers read the writing on the wall now and act to shore up opportunity where it's eroding fastest, they won't just prevent further damage to marginalized communities — they'll strengthen the foundation for resilience and shared prosperity across the entire economy.