Good morning!
Indeed’s Hiring Lab released its 2024 jobs and hiring trends report this morning, examining changes in job postings, labor force participation, quit rates, wage growth, and generative AI in 2023 and what they could mean for 2024. Overall, the U.S. saw positive labor trends this year, such as lower quits and strong workforce participation rates. But it’s still too early to be confident that 2024 will follow the same path.
“There’s a case for optimism for 2024, but it’s best not to oversell it,” writes Nick Bunker, economic research director for North America at Indeed Hiring Lab and the report’s author.
Below are the five trends outlined in the report:
Demand for workers is cooling
The Indeed Job Postings Index, which tracks the percent change in job postings, is down 22.5% from its late December 2021 peak.
“High remote” sectors, those with the strongest concentration of remote roles, saw the steepest decline in job postings, such as software development (down 51.3%), information design and documentation (down 44.3%), and mathematics (down 40.1%). Sectors providing in-person services, such as restaurants, hotels, and hospitals, saw continued hiring demand, up 3.1% since mid-June 2023.
Despite hiring for fewer new positions, employers are also holding onto their current staff, Indeed found. Layoffs remain historically low—the September 2023 layoff rate was 1%, lower than the lowest pre-pandemic rate.
How next year's labor market will fare depends on whether demand for workers continues to fall, the report warns. Gradual cooling demand for new hires could prevent a spike in unemployment, but a rapid decrease could cause unemployment to rise as people struggle to find jobs.
Aging population may stunt labor force participation
The U.S. labor force grew by an average of 276,000 people per month through the first 10 months of 2023, well over the average of 131,000 workers in the three years before the pandemic. The workforce participation rate of prime-age workers (aged 25 to 54) rose to levels unseen in 20 years, currently at 83.3% as of October. Part of this boost is due to a rebound in immigration; roughly a quarter of labor force growth in the last year was from foreign-born workers.
Still, more baby boomers are exiting the workforce than expected. Despite the increase in prime-age workers, this aging population will likely cause the participation rate to fall and create an even more limited labor supply.
Workers are still quitting
2023 apparently marked the end of the “Great Resignation.” Quit rates were at 2.3% in September, matching the average rate in 2019. But, as the Bureau of Labor Statistics noted in June 2020, the quit rates in 2019 were still high compared to the previous 20 years.
“If you were paying attention to quits rate data in 2019, that was considered a positive sign for job seekers,” Bunker said at a press conference held earlier this week. A further decline in quit rates could suggest job seekers' diminishing confidence in the economy and ability to find a role.
Some sectors' quit rates remain high compared to pre-pandemic, including leisure and hospitality, manufacturing, and transportation and warehousing. And workers in some industries are looking for roles outside their fields. The share of civil engineering professionals looking for jobs outside their field was 85.7% in September 2023, an 8.9% increase from September 2019, according to Indeed data.
Wage growth dies down
Lower quit rates, increasing labor supply, and falling worker demand sparked a drop in wage growth this year, returning to a pre-pandemic rate. According to the Indeed Wage Tracker, which measures changes in wages advertised in job postings, October wages were up 4.2% year-over-year but well below the 9.3% year-over-year wage spike in January 2022.
At the same time, consumer prices were 3.2% higher year-over-year in October, above both pre-pandemic averages and the Federal Reserve’s 2% inflation target.
“What we're really eager to see next year is does the decline in wage growth translate to lower inflation?” says Bunker. “There was the idea that the labor market was going to be a continuing source of fuel for higher inflation. [But] wage spiral doesn't seem evident at all in this data. The concern is that maybe things start to stall out on the inflation side. And luckily, we haven't seen that yet.”
Generative AI use sees uptick
Around 0.06% of job postings on Indeed mentioned generative AI in late October. While that number—a fraction of 1% of jobs—may be small, it was a 20-fold increase from the beginning of 2023 (0.003% of all job postings).
“It’s still very low; it's still very small. So it'll be interesting to see how much more it increases, but in particular what jobs that we're seeing growth coming from,” says Bunker. While the bulk of these job listings are for professionals who build AI tools, like engineers or data scientists, a number of postings are also for professions in non-tech roles like marketing. “If we do see continued growth…that could be an indication of increasing usage of those tools, that they're spreading throughout the labor market.”
Paige McGlauflin
paige.mcglauflin@fortune.com
@paidion
What HR trends are you watching out for in 2024? Let me know, and I may reach out or feature your reply in a future story.
