There’s no question that the US labor market is going through a particularly stormy episode at this moment. Job growth is slowing considerably and initial jobless claims are increasing. Data from the Department of Labor further confirms this, as continuing jobless claims are at four-year highs. This trend points to a larger battle that millions of workers are still fighting. Narrowing the lens to the hiring landscape in 2024, it’s hard not to see the growing weakness. For these reasons, economists are concerned for the long-term health of the employment sector.
In the August jobs report, those long-term unemployed made up 25.7% of the total unemployed, unchanged from July. This persistent joblessness signals that too many Americans are struggling to find full-time, stable work in a rapidly changing economy. Each day, approximately 10,000 Americans reach retirement age—resulting in close to 4 million new retirements per year. This demographic transition exacerbates the double-edged challenge in the labor market, with fewer workers entering available jobs.
Declining Job Growth and Economic Concerns
The current economic climate indicates a lack of broad-based employment gains, which economists warn could make the US more vulnerable to potential shocks. By mid-September, just seven states had seen an increase in their unemployment rates. These hikes were no less than 0.5 percentage points over the 12 month lows logged in that same period. If this new trend represents a core and not just cyclical slowdown in job creation, it could bode ill for longer-term economic dynamism and stability.
Even with these alarming numbers, the US continued to create 240,000 jobs in September 2024. This increase was equal to all the net new jobs added for the months of June, July, and August… combined. Hiring announcements during this month were reported as the weakest in more than a decade by Challenger, Gray & Christmas. ADP had predicted that private-sector establishments lost roughly 32,000 jobs in September, reflecting continued disruption from uncertainty across many industries.
“Last year, it probably took about 130,000 (jobs) per month to keep the unemployment rate steady; this year, it’s probably more like 50,000 or below,” – Ryan
Health care has been a bright spot, going on to be the leading sector in the overall recovery job growth. Countless others have gone dark. The foreign-born labor force has declined after peaking earlier this year, which may further affect hiring capabilities across various industries.
Shifts in Workforce Demographics
Beyond labor shortages, the aging workforce poses an intriguing conundrum to the US economy. As more and more people leave the labor market to retire, it suppresses the overall unemployment rate. The unemployment rate could stay the same while the job market cools thanks to this demographic trend. In August, the average workweek was 34.2 hours. In that same time frame, wage growth accelerated by 0.3% monthly and 3.7% yearly.
Change is coming, and workers such as Sarah Loyd are increasingly beginning to feel its effects personally. Loyd spoke recently about her journey to turn away from the arts and into health care in pursuit of “any semblance of stability” during these wildly unpredictable times. The health care sector is propping up historical employment gains this year. This robust growth provides some good news in the context of increasing unemployment numbers.
“I’m sending out emails to schools now to get back into school to pivot into health care — just to find any semblance of stability,” – Sarah Loyd
Moreover, economists have recently pointed to leading indicators showing that businesses are poised to significantly increase hiring over the next year. They continue to experience difficult short-term situations. Nicole Bachaud noted that “all of these data points say that the majority of businesses plan to increase hiring in the next 12 months, which is encouraging.”
Future Outlook for Employment
Until then, such changes are not guaranteed though labor market experts are, for now, cautiously optimistic about their prospects. Although hiring has slowed recently, a look at the historical pattern shows that hiring usually resumes in the following months. Brett Ryan reflected on past trends:
“We’ve seen the story last year, where you had a very weak summer of hiring and then hiring picked up again a bit in September,” – Brett Ryan
Many analysts are becoming concerned by the recent economic signs. At the same time, optimism persists among analysts, who point to resilience among certain sectors. Still, the story across the board continues to be one of apprehension as companies try to make sense of multiple shifting variables.
“There’s nothing stark, nothing out of the ordinary,” – Sandza
To leaders in government and industry, these finalizations and their subsequent implementations will be paramount. They must continue the work of ensuring a strong labor market demand while addressing the diverse needs of a shifting workforce.