Unemployment Rate Holds Steady at 3.7 Percent

January 5, 2024 – Employment rose by 216,000 in December as the U.S. unemployment rate was unchanged at 3.7 percent, according to the most recent U.S. Bureau of Labor Statistics report. The number of unemployed persons was 5.7 million in December. Employment continued to trend up in government, healthcare, social assistance, and construction, while transportation and warehousing lost jobs.

Among the major worker groups, the unemployment rates for adult men (3.5 percent), adult women (3.3 percent), teenagers (11.9 percent), Whites (3.5 percent), Blacks (5.2 percent), Asians (3.1 percent), and Hispanics (5.0 percent) showed little change in December. The number of long-term unemployed (those jobless for 27 weeks or more), at 1.2 million, was little changed in December and over the year. The long-term unemployed accounted for 19.7 percent of all unemployed persons in December.

The number of persons employed part time for economic reasons, at 4.2 million, changed little in December but was up by 333,000 over the year. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs.

The number of persons not in the labor force who currently want a job edged up to 5.7 million in December and was up by 514,000 over the year. These individuals were not counted as unemployed because they were not actively looking for work during the four weeks preceding the survey or were unavailable to take a job.

Among those not in the labor force who wanted a job, the number of persons marginally attached to the labor force changed little at 1.6 million in December but was up by 306,000 over the year. These individuals wanted and were available for work and had looked for a job sometime in the prior 12 months but had not looked for work in the four weeks preceding the survey. The number of discouraged workers, a subset of the marginally attached who believed that no jobs were available for them, at 346,000, was little changed in December and over the year.

“Jobs growth remains as resilient as ever, validating growing skepticism that the economy will be ready for policy rate cuts as early as March,” said Seema Shah, chief global strategist at Principal Asset Management. “Indeed, the recent run of labor market data generally points in one direction: strength.”

Related: Predicting 2024’s Talent Acquisition Trends

“The labor market is not too hot and not too cold at the moment,” said Christopher Rupkey, chief economist at FWDBONDS in New York. “The total number of Americans on the jobless rolls receiving benefits remains elevated relative to prior year levels, but at the moment there is not enough unemployment to say the economy is on the downward slope to recession.”

Where Job Growth Occurred

  • Government employment increased by 52,000 in December. Employment continued to trend up in local government (+37,000) and federal government (+7,000). Government added an average of 56,000 jobs per month in 2023, more than double the average monthly gain of 23,000 in 2022.
  • In December, health care added 38,000 jobs. Employment continued to trend up in ambulatory healthcare services (+19,000) and hospitals (+15,000). Job growth in healthcare averaged 55,000 per month in 2023, compared with the 2022 average monthly gain of 46,000.

Reasons for Cautious Optimism in 2024

The labor market didn’t follow the script many people wrote for it last year. Despite many projections for a recession, a historically fast tightening of monetary policy by the Federal Reserve, a banking crisis, and geopolitical crises and uncertainty, the labor market stands strong. Getting to this spot required a few unexpected things to happen, according to Indeed’s 2024 U.S. Jobs & Hiring Trends Report. 

Indeed points to the following events: Job openings and job postings fell considerably, but layoffs stayed low. Workers came flooding back into the labor force, and employers continued hiring at a solid clip, but wage growth slowed. The so-called “Great Resignation” that marked the early post-pandemic years ended, but workers still felt comfortable leaving their jobs. A host of new artificial intelligence tools were introduced that threaten to upend how many workers do their jobs, but there’s no immediate sign of it displacing workers.

  • Employment in social assistance rose by 21,000 in December, mostly in individual and family services (+17,000). Social assistance employment rose by an average of 22,000 per month in 2023, little different than the average increase of 19,000 per month in 2022.
  • In December, construction employment continued to trend up (+17,000). Employment in nonresidential building construction increased by 8,000. Construction added an average of 16,000 jobs per month in 2023, little different than the 2022 average monthly gain of 22,000.
  • Employment in transportation and warehousing declined by 23,000 in December. Couriers and messengers lost 32,000 jobs, while air transportation added 4,000 jobs. Since reaching a peak in October 2022, employment in transportation and warehousing has decreased by 100,000.
  • Employment in leisure and hospitality changed little in December (+40,000). The industry added an average of 39,000 jobs per month in 2023, less than half the average gain of 88,000 jobs per month in 2022. Employment in the industry is below its pre-pandemic February 2020 level by 163,000, or 1.0 percent.
  • Retail trade employment changed little in December (+17,000). Over the month, employment increased in warehouse clubs, supercenters, and other general merchandise retailers (+14,000); building material and garden equipment and supplies dealers (+8,000); and automotive parts, accessories, and tire retailers (+4,000). These job gains were partially offset by a job loss in department stores (-13,000). Retail trade employment has shown little change, on net, since recovering in early 2022 from pandemic-related losses.
  • In December, employment in professional and business services changed little (+13,000). Employment in professional, scientific, and technical services continued to trend up (+25,000); this industry added an average of 22,000 jobs per month in 2023, about half the average monthly gain of 41,000 in 2022. In December, employment in temporary help services continued its downward trend (-33,000) and has fallen by 346,000 since reaching a peak in March 2022. Overall, employment in professional and business services changed little in 2023.
  • Employment showed little change over the month in other major industries, including mining, quarrying, and oil and gas extraction; manufacturing; wholesale trade; information; financial activities; and other services.

Related: Predicting 2024’s Talent Acquisition Trends

Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Executive Editor; Lily Fauver, Senior Editor – Hunt Scanlon Media

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