Culture Traveler CEO, Kareem George, shares his perspective in a thought-provoking article by Lydia Depillis featured in The New York Times : Job Market Starts 2024 With a Bang.
Job Market Starts 2024 With a Bang
U.S. employers added 353,000 jobs in January, far exceeding forecasts, and revised figures showed last year was even stronger than previously reported.
Feb. 2, 2024
Note: Data is seasonally adjusted. Source: Bureau of Labor Statistics By Ella Koeze
The United States produced an unexpectedly sizable batch of jobs last month, a boon for American workers that shows the labor market retains remarkable strength after three years of expansion.
Employers added 353,000 jobs in January on a seasonally adjusted basis, the Labor Department reported on Friday, and the unemployment rate remained at 3.7 percent.
The report also put an even shinier gloss on job growth for 2023, including revisions that added more than 100,000 to the figure previously tallied for December. All told, employers added 3.1 million jobs last year, more than the 2.7 million initially reported.
After the loss of 14 percent of the nation’s jobs early in the Covid-19 pandemic, the labor market’s endurance despite aggressive interest rate increases has caught economists off guard.
“I think everyone is surprised at the strength,” said Sara Rutledge, an independent economics consultant. “It’s almost like a ‘pinch me’ scenario.”
Ms. Rutledge helped tabulate the National Association for Business Economics’ latest member survey, which found rising optimism that the country would avoid a recession — matching a turnaround in measures of consumer sentiment as inflation has eased.
January’s crop of added jobs, nearly twice what forecasters had expected, mirrors the similarly surprising strength in gross domestic product measurements for the fourth quarter of 2023. It is also likely to reinforce the Federal Reserve’s patient approach on interest rates, given the risk that increased wages might push prices up faster.
Jerome H. Powell, the Fed chair, signaled this week that rate cuts would not begin until at least May, citing a desire to see more evidence that inflation is falling back to its target.
Unemployment has been under 4 percent for 24 months
Unemployment rate
Note: Data is seasonally adjusted. Source: Bureau of Labor Statistics By Ella Koeze
The latest job data prompted a victory lap from Biden administration officials, who highlighted an unemployment rate only a few ticks above a 70-year low.
“The fact that that’s been below 4 percent for two years running now is just a very clear and reliable signal that this is not just a tight labor market, but a reliably and persistently tight labor market,” said Jared Bernstein, chair of the White House Council of Economic Advisers.
January's gains were also broader than has been the case in other recent reports: Professional and business services accelerated to pile on 74,000 jobs, while health care added 70,000. The only major sector to cut workers was mining and logging.
Average hourly earnings also grew swiftly, at 0.6 percent from December.
Still, analysts cautioned against reading too much into the month’s overall gain, given recent volatility in initial survey estimates. Last January, for example, was much stronger than the full-year average. And the latest report contains a few oddities, as well.
The survey window was interrupted by bone-chilling cold and snowstorms, possibly shortening the workweek and raising hourly wages. Also, the addition of so many relatively well-paid white-collar workers may have pulled up the average. Hotels and restaurants, where pay is lower, shed a few thousand jobs.
Agron Nicaj, a U.S. economist at the banking and financial services firm MUFG, noted that job postings had been elevated in professional and business services for the past few months. That may mean January’s surge will be short-lived, especially given the latest report from outplacement firm Challenger, Gray & Christmas that found layoff announcements surged last month after a quiet quarter.
“I wouldn’t expect a reacceleration because of the relationship with the industries that grew this month and the openings,” Mr. Nicaj said. “I think this month reflects a refilling of jobs that they couldn’t fill.”
Wage growth sped up in January
Year-over-year percentage change in earnings vs. inflation
Note: Earnings data is seasonally adjusted. Source: Bureau of Labor Statistics By Ella Koeze
And yet it’s clear that the new year dawned on what has been an exceptionally good economy for many workers. Wages have been growing faster than their historical rates, and a strong increase in productivity over the last three quarters has helped keep those fatter paychecks from fueling higher prices. The number of open jobs still exceeds the stock of people looking for positions, even as new immigrants and women have joined or rejoined the work force in unexpected numbers.
That trend may continue if higher wages keep bringing people off the sidelines. The number of people not in the labor force who want a job has surged in recent months, to 5.8 million, suggesting that they could jump back in if pay outweighed the cost of child care or a long commute.
Over the past year, most gains have been powered by sectors that either took longer to recover from the pandemic — including hospitality and local governments — or have outsize momentum because of structural factors, such as aging demographics and pent-up demand for housing. Construction firms have kept hiring even in the face of high interest rates, because homeowners with low-rate mortgages are generally staying put, leaving new homes as the only option for would-be buyers.
The education and health sector leads in job gains
Change in jobs in January 2024, by sector
Note: Data is seasonally adjusted. Source: Bureau of Labor Statistics By Ella Koeze
Other categories that experienced supersize growth during 2021 and 2022, including transportation, warehousing and information technology, have been falling back to their prepandemic trends. Another handful of sectors, such as retail, have been largely flat.
One of those who jumped from a shrinking sector into a more stable one is Galvin Moore, 33, who worked in information technology for a freight broker until last fall, when he noticed the trucking sector contracting around him.
“It’s not just job security — it’s also the fear that you own career growth becomes limited by the industry,” said Mr. Moore, who is married with three children in a Houston suburb. He left for a position at an oil and gas services firm that is moving into technologies like geothermal energy and carbon capture. “They’re in growth mode, too,” Mr. Moore added, “It’s just a different phase of the cycle.”
The new gig also came with a 40 percent pay increase, which has allowed him to start paying down debt and think about buying a new house. “It’s like night and day,” Mr. Moore said.
Despite the prominent announcements of layoffs at companies like UPS, Google and Microsoft, most employers have been loath to part with workers, worried about being short-staffed if business picks up again. Although the share of workers quitting their jobs has fallen back to normal levels after a surge in 2022, Americans seem comfortable enough with their financial futures to keep spending money.
That has led to splurges on services like travel agencies, which saw their revenues sink almost to zero during the worst of the pandemic. While still a few thousand employees shy of 2019 levels, the American Society of Travel Advisors says the Bureau of Labor Statistics data does not reflect a surge of workers who have joined the industry as independent contractors, often working part time to supplement other jobs.
Kareem George, who runs a 10-person agency near Detroit that designs custom vacations, said his bookings were 20 percent above 2019 levels, with clients increasingly asking for luxury experiences like high-end dinners and private tours.
“I think there’s more confidence that they can plan longer term,” said Mr. George, who expects to hire two more people in the year ahead. “So they’re not thinking so much of, ‘I deserve it, I need to do it now,’ but also ‘I can also think about next year and the year after.’”
In the coming months, economists had expected the labor market to become more like its prepandemic self, without the giant job growth that followed the pandemic lockdowns. The latest numbers may call that assessment into question.
Even manufacturing, which has been in a mild recession for about a year, added 23,000 positions. That reflects optimism in the latest purchasing managers index for manufacturing, which jumped unexpectedly last month. Timothy Fiore, the chair of the Institute for Supply Management committee that oversees the survey, said it seemed like the beginning of a turnaround, even if a slow one.
“Now we’re starting to gain altitude,” Mr. Fiore said. “It’s not a fighter pilot gain; it’s a cargo plane gain.”
Jim Tankersley contributed reporting.
Lydia DePillis reports on the American economy. She has been a journalist since 2009, and can be reached at lydia.depillis@nytimes.com. More about Lydia DePillis
A version of this article appears in print on Feb. 3, 2024, Section A, Page 1 of the New York edition with the headline: Labor Market Starts the Year With Big Gains
