Friday's jobs report showed the U.S. labor market is strong and resilient, with wages outpacing inflation, welcome news for Americans looking to increase their purchasing power in 2024.
In December's employment statistics, the unemployment rate fell below 4% again, at 3.7%, the same level as in November, the lowest level in two years. The economy added 216,000 jobs, many of which were concentrated in social assistance, including health care, local government, construction, child care, social workers and home care aides. according to Based on data from the Bureau of Labor Statistics.
Democrats welcomed the news and took it as an opportunity to air their frustration with Republicans as policymakers grapple with the possibility of another government shutdown. US-Mexico border policy There are problems such as.Parliament is deadline Jan. 19 for four government spending bills and Feb. 2 for eight government spending bills.
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President Joe Biden said On Friday morning, he said the jobs report “confirms that 2023 was a great year for American workers.”
He added: “Strong job creation continued even as inflation fell to pre-pandemic levels of 2% over the past six months…”
Rep. Bobby Scott (D-Va.), ranking member of the House Education and Labor Committee, touted the strong jobs numbers and said, “Now is not the time to reverse economic progress. We remain committed to opposing any effort that risks the lives of everyday Americans to advance the lives of everyday Americans.”
Economists and data analysts provided The State Newsroom with highlights on the report's key news, from wages to health care job growth.
Rising wages and cooling inflation for U.S. workers offer reassurance
Wages are outpacing inflation, with average hourly wages increasing by 15 cents over the past year, or 4.1%. 3.1% inflation. Economists say inflation is falling fairly quickly and wages are steadily outpacing inflation.
Mark Zandi, chief economist at Moody's Analytics, said wage growth is now firmly outpacing inflation, meaning people's real purchasing power is increasing.
“It worsened sharply in 2021 and especially in 2022 when inflation exceeded wages,” Zandi said. “And I think that's one of the reasons why people are so uncomfortable with their financial position. But wage growth remains strong and steady, and inflation is declining and trending downward. It's improving now and it's improving very quickly because it's continuing.”
Elise Gould, senior economist at the Economic Policy Institute, added that low-wage workers in particular have seen a long-term increase in purchasing power.
“Over the past six months, average hourly wages for private sector workers have exceeded inflation, so their purchasing power has increased, and on average over the past few months, wages for low-wage workers have increased. We also know from other data that “growth occurs,'' she said. “They've been beating inflation for a much longer time. Overall, the decline in inflation is accelerating, so purchasing power is definitely increasing.”
Healthcare and government continue to add jobs
The number of government employees increased by 52,000, with local governments accounting for the majority, 37,000. According to the Bureau of Labor Statistics, the average monthly job increase in 2023 was more than double the average job increase in 2022.
Gould said there still appears to be room for continued growth in government employment.
“When you think about government employment, we still have a lot of catching up to do there because it hasn't quite kept pace with population growth,” she said. “It may seem like the services provided by the government will need to be expanded further. So I think there's quite a bit of room for things to not go back to normal in that sense.”
Employment continues to grow in health care, and Gould expects it to continue, in part due to America's aging population. Employment of health care workers increased by 38,000 in December. Ambulatory health services and hospitals saw job growth of 19,000 and 15,000 jobs, respectively.
Zandi sees these sectors largely playing catch-up after the private sector squeezed out some of these jobs by offering higher wages during the recovery.
“Private companies were willing to pay significant wage increases to retain workers and hire new ones,” he said. “And it was impossible for local governments and hospitals to cope with that. But now that the private sector has fully recovered, other sectors are able to hire again, find workers and add them to their payrolls. It’s starting to happen.”
Economists watch for signs of economic slowdown
Economists had mixed reactions to the 0.3 percentage point drop in both the labor force participation rate and the employment-to-population ratio in December. The labor force participation rate reveals the economy through the share of people of working age in the labor force. This includes both those actively seeking work and those currently employed. The employment population ratio indicates the number of people of working age who are employed.
Gould said he is watching the data closely to see whether these changes are a cause for concern, but it is important to remember that unemployment remains very low.
“Is it just the volatility of the series or is there something I should be careful about?” she said. “…this doesn’t indicate a major problem, but we will continue to monitor it closely. There wasn't.”
Zandi said it's still difficult to see detailed month-to-month changes in the data, but the labor market is slowing slightly.
“I think the general pattern in the data shows that the job market is resilient and continues to create a lot of jobs and the unemployment rate remains low. But it's slowing down. Employment “growth has slowed down decisively, and other indicators of the strength of the labor market have also slowed down. Working hours are falling, temporary employment is falling,'' he said.
Regarding the labor force participation rate, Mr. Zandi expressed the view that the labor force participation rate would not continue to rise.
“Baby boomers are retiring en masse, and any increased participation by other groups will come to nothing. “I think that's consistent with getting inflation back to a level that we're all comfortable with,” he said.
State salary trends
data Released by ADP, the payroll company on Thursday confirmed Zandi's view that the labor market is cooling, as wage increases for those who remain in the workplace fell in December from November. ADP's median year-over-year salary change was higher in states such as Montana, where salaries jumped 8.2%, and Idaho, where salaries increased 7.5%. New Mexico and Arizona also had higher pay raises than many other states, at 6.7% and 6.2%. Washington, Oregon, Wyoming, North Dakota, and South Dakota also saw wage increases during this period.
Liv Wang, chief data scientist at the ADP Institute, told The State Newsroom that ADP saw higher wage increases for low-wage workers during the recovery.
Wang added in an email: “…some of the states with higher wage increases have lower median pay levels. This is true for some states in both the Northwest and Southwest. This same trend is leading to higher wages. However, in a broader sense, salary growth has slowed recently and the pay premium for changing jobs has declined.
