U.S. Jobs Data Faces Scrutiny Amid Rise in Entrepreneurship and Side Hustles

The U.S. jobs data has come under increased scrutiny as shifts in the labor market challenge the traditional methods used to track employment trends. The Bureau of Labor Statistics (BLS) continues to rely primarily on W-2 payroll data to measure job growth, a metric that fails to capture the growing number of Americans who are starting their own businesses or engaging in freelance, part-time, or side work [1]. The most recent BLS report indicated just 73,000 jobs were added in July 2025—far below expectations—and revised figures for May and June showed a significant drop of 258,000 jobs, raising alarm about the state of the economy [1]. However, these numbers may not tell the full story.

According to the U.S. Census Bureau, new business formations grew by 6.48% from the first to the second quarter of 2025. While this rate may not seem dramatic, it represents a substantial increase compared to previous years, particularly during the pandemic when traditional job creation was on the rise [1]. New businesses play a crucial role in job creation by offering immediate employment to their founders and, over time, creating positions for others outside the traditional labor market tracked by the BLS [1]. This shift toward self-employment and micro-business creation can distort the perception of unemployment, as it pulls individuals out of the traditional job market and into alternative forms of work [1].

The surge in entrepreneurship is being fueled by technological advancements, particularly in artificial intelligence. AI-powered tools now allow individuals to launch businesses with minimal capital, experience, or risk. These tools streamline tasks such as website development, marketing, design, and financial planning, making self-employment more accessible than ever before [1]. MarketWatch reported in April 2025 that 51% of Americans now have a side hustle, with 72% of Gen Z participants engaging in such work within the past year [1]. This trend highlights a fundamental shift in how Americans are engaging with the workforce, one that is not reflected in traditional employment statistics.

The limitations of current labor metrics are further underscored by the declining response rate to the BLS monthly employer survey, which has dropped significantly since the pre-pandemic period [5]. This decline raises concerns about the representativeness of the data collected, as fewer responses can lead to skewed results [2]. Additionally, the BLS has faced political pressure, including public criticism and high-profile leadership changes, which have contributed to public skepticism about the reliability of its data [3]. While some argue that U.S. jobs data remains 99.9% accurate based on the frequency and magnitude of revisions, the cumulative effect of these issues suggests that the system needs to evolve [5].

To better capture the realities of the modern workforce, analysts suggest integrating a broader range of data sources—such as new business registrations, freelance platform activity, and surveys of small businesses—into employment statistics [1]. These alternative measures could provide a more comprehensive and accurate picture of labor dynamics in the U.S. economy. Without such updates, the current framework risks missing key developments in the labor market, leading to misinformed policy decisions and public perception.

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[1] title: Why America's jobs data may be getting it wrong (url: https://fortune.com/2025/08/08/why-americas-jobs-data-may-be-getting-it-wrong-entrepreneur-small-business/)

[2] title: The jobs report is a big deal. Trump's response is an even ... (url: https://www.vox.com/today-explained-podcast/422601/trump-economy-bls-firing-erika-mcentarfer)

[3] title: Trump firing labor statistics head won't achieve his agenda ... (url: https://www.theguardian.com/us-news/2025/aug/08/trump-labor-statistics-jobs-numbers)

[5] title: U.S. jobs data can be seen as 99.9% correct (url: https://www.lowellsun.com/2025/08/06/u-s-jobs-data-can-be-seen-as-99-9-correct/)