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It’s no secret that the U.S. economy has ebbed and flowed over the years, with 2023 seeing its fair share of volatility and headwinds with factors like high interest rates and inflation. Now, as we step into 2024, we’ve taken a deep dive into research to uncover what might be in store for job seekers.
With that being said, the sustainability of the 2024 labor market’s strength is yet uncertain. While current indicators suggest a positive outlook for the economy this year and job seekers should remain cautiously optimistic, it’s crucial to prepare for unforeseen challenges, as past successes don’t guarantee future outcomes. Below, economists break down labor trends that are expected in 2024 and what they mean for workers.
We can anticipate wages and raises to keep slowing down, possibly going back to the levels we saw before the pandemic.
Amidst the Great Resignation, numerous employers enticed employees to stay by offering more substantial pay raises and bonuses. However, as the balance of bargaining power shifts back to companies, experts caution that workers should not anticipate the generous pay raises seen during the pandemic era in the upcoming year.
With quit rates on the decline, Nick Bunker, the economic research director at job platform Indeed, notes that employers are exerting less effort to compete for existing labor force members, resulting in diminished wage growth due to decreased competition. Although October’s wages on Indeed showed a 4.2% increase from the previous year, this is a decline from July’s 4.8% and significantly below the peak of 9.3% in January 2022, according to Indeed’s wage tracker. If this deceleration continues, Indeed predicts that wage increases will return to pre-pandemic levels by mid-2024.
The pace of hiring is expected to decelerate further; nevertheless, companies maintain intentions to increase their workforce in 2024.
Companies have scaled back on hiring in the latter part of 2023, opting for leaner operations after a period of robust recruitment. According to the latest jobs report from the Bureau of Labor Statistics, the U.S. added 216,000 jobs in December, surpassing economists’ expectations but falling short of the 223,000 jobs added in the previous year.
Economists anticipate that this hiring slowdown will persist into 2024. Morningstar experts project stagnant growth by mid-2024, with a subsequent recovery in the following year.
For those contemplating a job transition or entering the job market, Morningstar’s Caldwell advises taking action now. He emphasizes that waiting might not be the best strategy, as opportunities are expected to diminish over the next year amid a broader slowdown in the job market. While the timing might not be as favorable as it was a year ago, it remains more advantageous than waiting another year.
While layoffs can be unpredictable, economists anticipate that they will be minimal in 2024.
According to a recent report from outplacement firm Challenger, Gray & Christmas, employers cut 34,817 jobs in December, down 24% from the 45,510 cuts announced in November. Despite the perception of ongoing layoffs, the figure is 20% lower than the 43,651 job cuts reported one year prior.
Nick Bunker emphasizes the constant presence of layoffs in the labor market, expressing hope for containment and sustained low levels in the coming year. According to the Bureau of Labor Statistics, the layoff rate, calculated as the number of job cuts in a month as a percentage of employment, was 1% in November—slightly below pre-pandemic levels. Experts foresee this rate remaining stable in 2024, with a potential risk of an abrupt increase to a more recessionary level if the U.S. experiences a downturn, warns Caldwell.
Despite the persistent hurdles in talent acquisition, companies are notably hesitant to initiate further layoffs, as pointed out by Morningstar’s Caldwell. He observes that, given the lingering impact of recent labor shortages, businesses are emphasizing the retention of their current workforce. Looking forward, there’s a potential trend of “labor hoarding” on the horizon as companies prioritize securing and maintaining their workforce in the upcoming year.
In navigating the intricacies of the 2024 job market, it’s clear that both challenges and opportunities will shape the path forward. The economic landscape, marked by shifts in hiring trends, layoff rates, and the cautious optimism of employers, sets the stage for a dynamic year ahead. While some industries may experience a slowdown, the prospect of increased roles offers a silver lining for job seekers. As we step into the new year, the key lies in remaining adaptable and proactive. Job transitions and entries into the labor market may find a sweet spot in the present, as companies, mindful of past labor shortages, appear inclined to retain their workforce. The evolving employment scenario calls for strategic moves, and with careful consideration and timely action, individuals can position themselves to navigate the changing tides of the job market successfully.