For almost two years, many economists and observers have figured something has to give in the labor market. And then the labor market has turned around and said, “Ha, actually, no.”
January’s jobs report came in strong on Friday, defying expectations on multiple fronts. The economy added 353,000 jobs during the first month of the year, well above the 187,000 economists expected. The number of jobs added in previous months was revised higher, and wage growth was better than anticipated, too. The unemployment rate stayed at 3.7% and has been under 4% for two years, the longest sub-4% streak since the late 1960s. If you don’t count the 2021 and 2022 — which were unique and extraordinary for what I hope are some obvious reasons — 2023 was the best year for job growth since 1999.
Sure, there are points buried in the data that are not so great. The number of hours worked was down, a potentially worrying sign, but even that might have been an anomaly caused by bad weather. Still, sometimes, good is just good, and in this case, the pace of job growth may be more sustainable than the white-hot jobs market of 2021 and 2022.
“The labor market is no longer a Ferrari just flying down the street,” Nick Bunker, the director of North American economic research at the Indeed Hiring Lab, said, “but maybe it’s a car that can actually make a cross-country trip.”
Workers have been on a roller coaster over the past four years. When the pandemic hit, millions of people lost their jobs more or less overnight. Then, the economy’s reopening set up workers for a pretty awesome stretch. Businesses clamored to hire people back and had to offer more money to get them in the door. Many workers who wanted to Great Resign and find a better job could do so. Or they quiet quit, and their bosses didn’t do much about it, because who else was going to fill that spot? Wages rose fast, especially for those at the bottom end of the income spectrum, though high inflation took a bite out of a lot of paychecks.
What we’re finding is a lot of things that sort of drifted out of orbit have come back toward orbit.
Guy Berger, director of economic research at the Burning Glass Institute,
It’s hard to define what a “normal” job market should look like, but using, say, 2018 and 2019 as a baseline, the landscape now is looking like it could fit that definition.
“What we’re finding is a lot of things that sort of drifted out of orbit have come back toward orbit,” Guy Berger, the director of economic research at the nonprofit Burning Glass Institute, said.
Will it feel as good for workers? There’s always a bit of a comedown when the party’s winding down, but every day can’t be a party, either. It’s no longer quitapalooza. Workers are voluntarily leaving their jobs at rates similar to pre-pandemic, and in 2023, people quit 6.1 million fewer jobs than the previous year. Companies have slowed down hiring, too. Layoffs are still below where they were in 2019, though some observers have voiced concerns about a recent uptick.
If you’re trying to upgrade your job, you’re trying to get a better job, the time to do that was probably a year ago.
Preston Mui, senior economist at Employ America
What that means is that workers are facing a different landscape than they were in the recent past. If you have a job, you’re at a relatively low risk of losing that job — despite the headlines about layoffs at some big-name companies. Still, you might be hesitant to quit, and people currently in the market for a new job might be in a pickle. It’s not impossible to get hired, but it might take longer than you thought it would, and you may not be able to be as picky in terms of the job you get or the pay.
“If you’re trying to upgrade your job, you’re trying to get a better job, the time to do that was probably a year ago,” Preston Mui, a senior economist at the macroeconomic policy group Employ America, said.
Workers have less leverage now, too. If your boss says, “I better see you at 9 a.m. in the office tomorrow,” you might want to think twice about saying no. People may not be getting raises as big as they were in 2021 or 2022, but since inflation is coming down, they are getting more purchasing power. Workers will be able to get more bang for their buck, especially if this job market or something close to it lasts.
I am a perpetual worrier about all things, including the economy and jobs. My instinct is always to think, “Nah, things can’t be that good, right?” And I don’t think I’m alone in that — over the past couple of years, many people have been concerned that the labor market was on the precipice of a breakdown. Heck, the conventional wisdom was that unemployment had to spike in order to bring inflation down. But after Friday’s jobs report, and given trends in employment and inflation last year, that notion is starting to look a little silly.
But just because there hasn’t been a sudden spike in unemployment doesn’t mean it’s an ideal moment to hop to a different job or bank on HR being terrified to lose you if they don’t give the fat raise you requested.
It’s not the case that nothing can turn the current situation negative, and if and when things do turn negative, they may turn quite fast. But right now, they’re just not turning, at least not in a way that should keep workers up at night.
Emily Stewart is a senior correspondent at Business Insider, writing about business and the economy.