The U.S. economy added 172,000 jobs in May, more than doubling economist forecasts of 85,000, with unemployment holding at 4.3 percent. March and April were revised up a combined 93,000, putting the two-month total at 393,000 — substantially stronger than first reported. The second-largest sector gain of the month came not from private industry, but from local government, funded by taxpayers.
Local government employment rose by 55,000 in May, with 44,000 of those jobs in local government excluding education — police, fire, public works, transit, and administration. Property tax collections reached a record $203.4 billion in Q2 2025, up 2.5 percent year-over-year, giving city and county governments the cash to hire. State and local employment now stands 643,000 above its pre-pandemic peak.
The contrast with the federal workforce is direct. DOGE-driven reductions cut over 300,000 federal positions in the past year. Indeed’s Hiring Lab documented that local agencies performing similar functions to their federal counterparts actively recruited displaced federal workers. The federal payroll shrank. Local governments hired — and the cost moved from federal taxpayers to local ones.
Leisure and hospitality led all private sectors with 70,000 jobs added, well above its 12-month average of 14,000, with food services accounting for 48,000. Health care added 35,000, in line with trend. Financial activities lost 22,000 and is down 107,000 since its peak in May 2025.
Long-term unemployment — those jobless 27 weeks or more — held at 2.0 million but is up 524,000 over the year, now accounting for 27.5 percent of all unemployed people. The headline number does not reflect that figure.
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