Unemployment in the USA 2025: Key Causes, Trends, and benefits

Introduction

According to the International Labour Organization (ILO), unemployment is the situation of the available workforce who are looking for work but are unable to find one.

This definition of jobless, however, varies from country to country. For example, unemployment in the USA, which is a key indicator of the American economy, is determined through an index called the jobless rate whose calculation can be influenced by many variables.

I- The evolution of unemployment in the United States

The american jobless Rate represents the percentage of the total labor force that is unemployed but actively seeking work in the quarter preceding publication.

It is an indicator key to labor market performance, which represents a key statistic illustrating the percentage of the active workforce unemployed but looking for work.

It classifies as unemployed people aged under 16 who are unemployed, available for work, and who have actively sought employment during the last four weeks of the reference period in question.

As a result, a large number of “unemployed” people are not counted as “unemployed.” This indicator therefore does not reflect the many difficulties in accessing the labor market.

So,the rise in inactivity helps to explain the continued low level of jobless over the recent period because some job seekers are given a status other than that of unemployed.

For example, the consequences of prison policy also contribute to the decline in the labor force participation rate. Prisoners, who make up about 1% of the American population, are counted among the inactive.

This leads to putting the performance of the labour market into perspective, as the reduction in activity rates could have a negative impact on production and growth in the medium term.

In this sense, we can present the different measures of unemployment calculated by the Bureau of Labor Statistics (BLS) as follows :

• Official unemployment;
• Official unemployment + discouraged workers;
• Official unemployment + discouraged workers + people marginally attached to the labor market;
• Official unemployment + people marginally attached to the labor market + part-time for economic reasons.

This is why the Bureau of Labor Statistics (BLS) has been publishing various measures of labor underutilization since the mid-1990s, which provide a more realistic view of the labor market situation..

It should be noted that the unemployment rate rose to 4.3%, bringing the number of unemployed to 7.4 million in August 2025, the highest level since fall 2021.

II- The causes of unemployment in the USA

The unemployment rate is very sensitive to the economic situation. Thus,the American labor market is cracking under the effect of economic slowdown induced by Donald Trump’s protectionist offensive since his return to the White House, which has notably led companies to put investment projects on holdtime to see more clearly the level at which customs duties on products entering the United States will ultimately be.

Likewise, the reduction in migratory flows following restrictive immigration policy led by the Trump administration, which has weighed heavily on economic growth, leading to a rise in the unemployment rate.

Moreover, job creation was concentrated in local government and health, while jobs continued to be destroyed at the federal level, in line with the wishes of the Republican government.

III- The FED’s measures against unemployment

To control the level of inflation and unemployment, the American central bank also called the Federal Reserve (Fed) uses monetary policy as a tool to ensure full employment and price stability through changes in the key rate.

So, when unemployment rises, it can lower its rate to stimulate the economy, but when prices rise, it can on the contrary increase its key rate to slow activity and limit the runaway.

But when both elements deteriorate at the same time, it must choose between accepting higher prices or seeing people lose their jobs.

IV- Unemployment insurance in the United States

The law on jobless insurance was first adopted in the state of Wisconsin in the United States in 1932, during the Great Depression, when the unemployment rate continued to rise and exceeded 25%.

Six other states adopted comparable laws before, in 1935, a text profoundly modified the unemployment insurance system in force in the United States : the Social Security Act, which then laid the foundations of the American social security system.

Indeed, unemployment benefits provide insurance against the risk of job and income loss. The transition from employment to unemployment involves a loss of income that unemployment insurance helps to compensate for, at least in part.

It’s worth noting that there isn’t one unemployment insurance scheme, but 53. The federal government sets the framework, and each state defines specific rules regarding contribution rates, the amount of benefits paid to job seekers, and the duration of compensation. However, they have one major commonality : the rules adapt to the economic situation.

It should be noted that unemployment insurance schemes are mainly financed by employer contributions deducted from wages. The contribution rate varies according to several criteria. First, at the level of each company, depending on the history of layoffs : the more a company lays off employees, the higher its contribution rate; this is the principle of Experience Rating.

Thus, the contribution modulation system consists of making each employer bear the costs generated by its layoffs. This is not a tax mechanism, but a method of calculating social security contributions.

Moreover, the American unemployment insurance system is distinguished by two levels of governance :

1- Federal

The federal state defines framework laws, monitors the performance of states and finances the administration of the system.

2- State

The main operation of the unemployment insurance system is managed at the level of each State via the “State Workforce Agency” which ensures the collection of contributions, the monitoring of the eligibility of beneficiaries and the payment of benefits.

V- Eligibility for unemployment insurance

In order to be eligible for unemployment insurance, jobless claims must meet the specific conditions of each State.

In general, all states require at least three main conditions :

• Being involuntarily deprived of employment;
• Provide proof of a certain length of previous activity and certain income during the reference period;
• Be able to work, available for work and actively seeking employment.

In most states, the maximum duration for which a job seeker can receive benefits is 26 weeks (6 months). However, this duration can vary between 12 weeks (in Florida and North Carolina) and 30 weeks (in Massachusetts). In most states, the duration of benefits also varies depending on previous earnings.

Conclusion

Disability insurance serves as a safety net for people who have difficulty finding employment. This process is not only the result of a relaxation of eligibility criteria, but also illustrates the difficulties unskilled workers face in finding employment.