Published on Oct 23, 2026
This article was written by Adem Tumerkan
Content Editor, Dunham | 2025 ThinkAdvisor Luminaries Award Winner | 2026 Wealthies Finalist, Thought Leader of the Year | Macroeconomics, markets, geopolitics & global trends
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The U.S. labor supply-demand gap has narrowed roughly 87% since its 2022 peak. France’s rising debt and borrowing costs are intensifying fiscal pressure. Workers’ contributions to employer-sponsored family health insurance rose 9% in 2026, nearly triple the pace of wage growth
Labor demand exceeded supply by roughly 900,000 on this adjusted measure as of August 2026 - down about 87% from its 2022 peak.
For most of the 2000s, labor supply outpaced demand, which meant there was slack in the economy that kept wages and prices relatively cool. That started reversing around 2018, paused briefly during COVID, then surged after 2021 as demand for workers shot past supply and kept wage growth running hot - feeding inflation along with it. The gap is now down 87% from its peak, but it’s still in tight territory, meaning some of that wage pressure hasn’t fully left the system yet.
Picture a scale. Open jobs pile up on one side vs. available workers on the other. Whichever side is heavier holds the leverage, and for most of the 2000s and 2010s, the worker side stayed heavier – meaning there was more supply, so businesses had their pick, and wages stayed somewhat tame and kept a lid on inflation.
Well, the scale started tipping the other way around 2018.
Open jobs began to outweigh available workers for the first time in years. COVID knocked it back down for a few months in 2020 as demand for workers plunged. But then it took off.
By 2022, the gap hit roughly 7 million. And nothing in the historical data before that ever came close.
A few macro commentators point to retiring baby boomers to explain why labor supply has tightened, since retirees leave the workforce for good¹. Surging stock markets and asset prices have also juiced up portfolio returns, pushing more Americans to retire ².
Either way, there was massive demand for labor relative to supply.
That surge helps explain the wage boom that followed. More open jobs than available workers means businesses bid against each other for the same people. And wages are a price like any other (they rise when demand outruns supply).
But here’s what matters now. . .
By August 2026, that gap had shrunk to about 900,000 - down ~90% from its 2022 peak.
And while that’s helped bring wage growth down (and inflation with it), it’s still in tight territory, which keeps some wage pressure alive.
So is this structural, or will a cooling economy rebalance it the old way?
The demographic piece looks structural. Retirees who left the workforce for good don’t come back just because hiring slows - meaning if boomer retirements explain a real chunk of the shrinking labor supply, that part of the gap won’t close on its own.
The rest looks more cyclical. Job openings can keep falling as companies cut back hiring. Or unemployment can keep climbing as layoffs pick up. Either one would shrink the gap further, probably faster than any demographic trend could.
But how this gap closes is key. Fewer unfilled jobs alongside steady employment would be consistent with a mild slowdown. But a sharp rise in people looking for work and struggling to find it would be more concerning (like in 2008).
For now, the extraordinary post-pandemic imbalance has largely unwound – but it is still tight.
The question now is whether hiring demand can keep cooling without a substantial rise in unemployment - and how much wage pressure remains along the way.
French 10-year bond yields touched 5.14% this week³ - the highest since 2002 - as spread over German Bunds widened to 177.7 basis points, the widest since the 2011 euro debt crisis, as a stalled budget, violent street protests, and a presidential election six months out collide with a deficit running at 5.4% of GDP.
France isn’t a peripheral economy investors can shrug off. It’s the eurozone’s second-largest, sitting right behind Germany, one of the currency union’s core pillars. When Greece, Portugal, Italy, Ireland, and Spain all wobbled back during the 2011 euro crisis, they had Germany and France to lean on. Ask yourself what backstop is left if France is the one wobbling this time.
The headlines out of France right now are all about protests and politics. Riot police, burning cars, a government that can’t pass a budget. That’s scaring investors, but these all may be symptoms of the same disease.
Think of the eurozone as a household. If Germany is the mom, then France is the dad. When mom’s finances are solid but dad’s income relative to his spending grows increasingly unstable, the household isn’t fine just because one parent is.
For starters - French government spending now runs at 57.2% of GDP, among the highest of any developed economy on earth. That means for every euro France’s economy produces in a year, the government spends or hands out about 57 cents of it somewhere - like salaries, pensions, healthcare, welfare, debt interest, etc.
Secondly, France ran a 5.1% deficit in 2025⁴. The government’s own forecast puts 2026 at 5.4% (the EU’s technical limit is 3%, so it’s almost double that⁵).
Because of these two things, France's debt has surged.
To give you some context, it was 65% of GDP back in 2007. But by 2025 it had nearly doubled⁶ to ~115%. And the finance ministry’s own projection has it at 119.3% this year and 122% in 2027.
That’s the backdrop the protests are sitting on top of. Workers are furious about the cost of living. Fair enough. But Dad can’t just spend his way out of that anger – especially when his spending is already the reason the family budget is stretched this thin.
The spread over German Bunds is the market pricing that exact reality.
German bonds are the benchmark, the rate the market charges the currency union’s most reliable borrower. Thus, every basis point France trades above that is the market saying it sees more risk lending to the second parent than the first. That spread hit 177.7 basis points this week - the widest since the 2011 euro debt crisis, meaning investors haven’t been this uneasy about France specifically since the last time the whole currency union nearly came apart.
But here’s the big difference to keep in mind this time around.
Back in 2010 and 2011, when that spread last blew out this wide, France’s debt sat around 85% of GDP. Today it’s pushing 120% and heading higher.
Said another way, France is being squeezed between more debt and higher rates.
That’s a dangerous combination – because a country doesn’t pay off its debt all at once. It rolls maturing bonds into new ones, year after year, at whatever rate the market demands that day.
France borrowed heavily over the last decade at rates near zero. Now it has to refinance that same debt at yields above 5%, and every extra percentage point on a pile this size is money the budget has to find from somewhere else.
So, everybody loved the eurozone’s dad when the bar tab was free. Now the bartender wants cash, and the whole family’s now worried about what comes next.
Figure 2: Bloomberg (October 2026)
The average employer-sponsored family health plan now costs $28,303 a year, and the worker’s own share jumped 9% in 2026 alone⁷ - nearly triple the pace of wage growth.
This affects nearly 160 million Americans under 65, more people than Medicare and Medicaid combined. Wages grew just 3% this year, the slowest pace since 2021, and real wages (adjusted for inflation) actually fell. When the cost of keeping a family insured rises 3x faster than their paycheck, that’s technically a pay cut – further amplifying an affordability crisis.
Many focus on wage growth, but what about the deductions that come out of your wages? Things like healthcare at your job, the thing we all pay hundreds (thousands) into.
The average family plan through an employer now costs $28,303 a year, employer + worker combined. That’s up 5% from last year.
But if we look at the worker’s own slice of that bill (not what the employer covers), things look worse for millions.
Workers paid $7,471 of it this year - up 9% from 2025. That’s nearly double the overall premium increase, and nearly triple the 3% wage growth workers actually saw.
Now, this trend isn’t new.
Since 2001, workers’ annual contributions toward employer-sponsored family health coverage have more than quadrupled, while median weekly pay has roughly doubled. Thus, family premiums have climbed far faster than earnings over that period, which worked like an indirect pay cut.
And where you work changes how hard this hits.
For instance - employees at firms with fewer than 200 workers pay nearly $2,850 more a year for the same family coverage than workers at large companies.
Meanwhile, new drugs are adding fuel to the fire.
About one in five large employers now cover GLP-1 drugs for weight loss and diabetes, and most say those drugs are already hitting their total spending. Expect more clinician visits and lifestyle-plan requirements to show up as a condition of coverage (a sign employers are bracing for the cost instead of “eating” it).
Nearly 157 million Americans under 65 get their coverage this way – thus it’s another major cost at a time when affordability is already weighing many down.
Also, it’s still a cost for employers - which can disproportionately hurt small businesses.
So, call it the membership fee for staying alive – it’s non-negotiable (unless you opt out), due every paycheck, and somehow going up every single year whether your own health changes or not.
S&P Global Market Intelligence — Older Americans leaving workforce poses challenges for AI plans [spglobal.com]
Yahoo Finance — Older Americans are dropping out of the workforce. Blame the soaring stock market. [finance.yahoo.com]
Bloomberg — Stock Market Today: Dow, S&P Live Updates — October 21, 2026 (title based on linked address; headline unverified) [bloomberg.com]
Trading Economics — France Government Debt to GDP [tradingeconomics.com]
Eurostat — Excessive deficit procedure [ec.europa.eu]
Trading Economics — France Government Debt to GDP [tradingeconomics.com]
KFF — Workers Now Pay $7,471 on Average Annually for Family Health Coverage, Up 9% or $621 from 2025, Benchmark Employer Health Benefits Survey Finds [kff.org]
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