Why Job Numbers Don’t Tell the Whole Story

The U.S. labor market is sending mixed signals.

According to Marcus & Millichap, 162,000 jobs were added in August, with June and July numbers revised upward by a combined 55,000. Approximately 80% of August’s net job gains were primarily in food services, local government and health care.

At the same time, hiring remains sluggish, and employers report difficulty finding workers.

BGO’s Chief Economist Ryan Severino said there are contradictions in discussions of the labor market.

“Employers can struggle to find workers, while graduates struggle to find their first professional job,” he said in a recent article.

Discrepancies and Divides

Severino pointed out that unemployment held at 4.1% in August, while 35% of small-business owners reported openings they could not fill. Yet, hiring is sluggish, especially among younger workers.

Employment among 22-to-25-year-olds fell 1.9% between November 2022 and June 2026, while employment among every older age group increased.

Among AI-exposed occupations, employment for younger workers fell about 11%, compared with a roughly 10% increase in mainly non-AI-reliant jobs. However, Severino cautioned that the data don’t establish AI as the cause.

“Hiring can also respond to business conditions, training costs, and management’s expectations about what AI might eventually do,” he said.

Skills Mismatch Meets Expansion

The labor shortage looks different in manufacturing. Marcus & Millichap said that the sector added 16,000 jobs in August, its third consecutive monthly gain. Manufacturing job openings jumped by 79,000 in July.

“Labor availability is likely to remain a headwind, as many manufacturers continue to report difficulty in finding skilled workers,” Marcus & Millichap said.

This matters for commercial real estate because job growth, the usual harbinger for what areas to develop and invest in, might not provide enough decision-making data. Instead, employment types, labor needs and locations that appeal to employers can be just as important as national job numbers.

The CRE Labor Equation

Another consideration when analyzing labor and commercial real estate is the property type.

For multifamily, Marcus & Millichap said that slower immigration could eventually weigh on household formation and apartment absorption. At the same time, Bank of America noted that lower-income households are exhibiting the strongest wage gains of any income group.

“This may be helping Class C apartments, where rent growth at renewal remained near 3% in July, and renewal conversion reached roughly 60%, its highest level since 2022,” Marcus & Millichap said.

Severino pointed to delayed relocation or independent household formation among young professionals struggling to establish careers. Meanwhile, markets attracting expanding employers could gain renters.

Office also faces the labor-market divide. Severino said that companies successfully using AI could help drive employee expansion as “some intensive adopters have expanded both total and entry-level employment faster than comparable firms adopting later.”

While AI’s role in hiring remains uncertain, Severino explained that employment could expand with investment in technology.

The broader lesson for CRE is that the job headlines don’t tell the full story. Employment growth also depends on industry, occupation, worker age, company strategy and geography. This information helps determine where jobs are created and where the demand for offices, apartments, industrial properties, retail and self-storage could follow.

Photo: Domenico Fornas/Shutterstock