The U.S. labor market is shifting toward skilled labor as white-collar hiring slows (2024)

America's job market increasingly appears to be splitting into two tracks, economists say, alongside a steady demand for skilled workers and a flagging interest in hiring more "knowledge-based" professionals.

The evidence can be found in the data, which shows a higher unemployment rate for professional and business services workers, and a lower one for people who work in manufacturing.

"It's a buyer's market for brain and a seller's market for brawn," said AaronTerrazas, chiefeconomistatthe jobs and workplace search site Glassdoor.

On Friday, the Bureau of Labor Statistics reported the latest monthly payroll data for the U.S. economy. Total employment rose by 175,000 in April. The unemployment rate rose slightly to 3.9% from 3.8% in March.

That came in below estimates of 240,000 jobs for April.

The softness in the jobs report was greeted with some positive reactions. Stock futures jumped after the news. Concerns about the U.S. economy have been focused on overheating — whether inflation will continue to rise and force the Federal Reserve to keep interest rates higher in an effort to slow the economy and bring rising prices under control.

Jason Furman, who served as President Barack Obama's top economic advisor, said on CNBC's "Squawk Box" that it was a "goldilocks" report, showing an economy that could be headed to the soft landing of reasonable inflation and low unemployment.

“The bottom line is this report is quite reassuring," said Furman, who now teaches at Harvard.

It's not that America is only — or even mostly — producing low-wage jobs. The health care industry continues to lead the employment boom, with an approximately 4.5% gain in payrolls over the past year, equating to some 750,000 new jobs. Other industries seeing strong growth include government jobs, certain sectors of social work, travel, tourism and the arts —alongside some manufacturing sectors.

But the overall labor market remains at something of a standstill, as seen in a report earlier this week showing the hiring rate continuing to drift sideways. At the same time, the rate of workers quitting or being laid off is also not showing much change. Economists led by Guy Berger at The Burning Glass Institute research group call it the "great stay."

"It’s a good time to have a job, but a not-so-good time to be actively looking for one," he wrote in his Substack newsletter Wednesday.

Many American consumers have also begun reporting signs of a deteriorating job situation. In its latest report on consumer confidence, the Conference Board business group said respondents to its monthly survey reported feeling less positive about the current labor market and more concerned about future business conditions, job availability and income.

That echoed findings of the New York Federal Reserve's monthly survey of consumer expectations, which reported more survey respondents feeling pessimistic about losing their job or finding a new job. Respondents rated the average probability of losing their job in the next 12 months at almost 1 in 6 — above pre-pandemic levels and the highest reading since September 2020.

"On the margin, businesses are not as eager to add staff," said Sarah House, managing director and senior economist at Wells Fargo.

But why has payroll data remained strong? One reason is increased supply, thanks to rising participation rates in the workforce, as well as booming immigration.

"There is increased labor 'supply' for businesses that do want to hire or add staff," House said.

Yet, those trends are likely to diminish too, if they haven't already, she said.

One sign that the job market remains strong is that the number of individuals collecting unemployment is still very low.

"We're seeing a gradual and orderly slowing" in workers quitting and firms with job openings, said Joe Brusuelas, principal and chief economist for RSM US LLP. That is consistent with private sector firms "carefully managing their labor force."

On Wednesday, Federal Reserve Chair Jerome Powell said the central bank does not intend to change its key interest rate anytime soon even as its fight against accelerating price increases has stalled —and despite the apparent softening of the labor market.

He said the central bank had "the luxury of strong growth and a strong labor market" that will allow it to maintain interest rates until inflation comes down further — and ruled out any implication that there might be "stagflation" in the economy.

But he invoked the prospect of a rate cut should the labor market "unexpectedly" weaken.

As inflation continues to moderate, Powell said, "We’re now focusing on the other goal," referring to the Fed's dual mandate of balancing price growth with jobs.

"The employment goal now comes back into focus. So we are focusing on it,” he said.

Some economists saw Friday's jobs report as sign that Powell's plans are coming to fruition.

"These are the #jobs numbers that Jay Powell was hoping for," David Wessel, director of the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution, posted on X.

Rob Wile

Rob Wile is a breaking business news reporter for NBC News Digital.

The U.S. labor market is shifting toward skilled labor as white-collar hiring slows (2024)


The U.S. labor market is shifting toward skilled labor as white-collar hiring slows? ›

The U.S. labor market is shifting toward skilled labor as white-collar hiring slows. America's job market increasingly appears to be splitting into two tracks, economists say, alongside a steady demand for skilled workers and a flagging interest in hiring more "knowledge-based" professionals.

Is the job market slowing down? ›

The job openings rate also fell significantly.

From its record 7.3% in early 2022, the job openings rate was down to an average of 5.3% in the first quarter of 2024. While we don't weight this as heavily as a driver of excessive wage growth as some do, it's still encouraging that openings are normalizing.

Is the US labour market tight or loose? ›

By the end of 2022, tightness had increased by 72% compared with its level before the COVID-19 pandemic. Its growth has cooled in 2023, but tightness as of August was still 32% higher than it had been in December 2019. SOURCES: BLS and authors' calculations.

Does the US have a strong labor market? ›

“Jobs growth has generally been stronger than everyone was expecting, and productivity has been strong over the last year,” said Michael Feroli, J.P. Morgan's Chief U.S. Economist. A tight labor market — characterized by low unemployment and few available workers to fill jobs — has been the U.S. default since 2023.

What is the polarization of job opportunities in the US labor market? ›

Employment growth is polarizing, with job opportunities concentrated in relatively high-skill, high-wage jobs and low-skill, low-wage jobs. This employment polarization is widespread across industrialized economies; it is not a uniquely American phenomenon.

Is hiring slowing down in 2024? ›

The labor market downshifted in April with employers adding 175,000 jobs; a notable slowdown from the pace in the first few months of the year. The unemployment rate ticked up to 3.9% — a sign that perhaps job gains need to be faster to keep joblessness steady.

How is the job market in the USA now? ›

Solid job growth

Yet the strength of today's labor market continues to exceed most analysts' expectations, particularly given the high interest rate environment. In the first three months of 2024, non-farm payrolls grew by an average of 276,000 jobs per month, to this point exceeding the pace of job growth in 2023.

Is US going through labor shortage? ›

Is there currently a labor shortage in the US? Job openings outnumbered unemployed people in the US from May 2021 to December 2023, according to Bureau of Labor Statistics (BLS) data. In December 2023, there were 0.7 unemployed people per job opening.

What is the current state of the labor market? ›

Total nonfarm payroll employment increased by 175,000 in April, and the unemployment rate changed little at 3.9 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in health care, in social assistance, and in transportation and warehousing.

Is the labor market weakening? ›

The April jobs report indicates the labor market is softening – but other employment indicators suggest there is no imminent weakening in the labor market. 175,000 jobs were added in April, the slowest gain in six months. The report is welcome news for the Fed as it alleviates some inflationary pressures.

Where is the biggest labor shortage? ›

  • Singapore. Skilled Labor Shortage: 79% ...
  • Slovakia. Skilled Labor Shortage: 79% ...
  • Romania. Skilled Labor Shortage: 79% ...
  • Hongkong. Skilled Labor Shortage: 79% ...
  • Brazil. Skilled Labor Shortage: 80% ...
  • United Kingdom. Skilled Labor Shortage: 80% ...
  • Canada. Skilled Labor Shortage: 80% ...
  • France. Skilled Labor Shortage: 80%
Jan 31, 2024

Who is the highest employer of Labour in USA? ›

Overall, the federal government is the largest employer in the US. As of September 2023, approximately 2.95 million individuals were part of the US Federal workforce. Here's what Vltava Fund said about JPMorgan Chase & Co.

Why is it so hard to find a job right now? ›

A trio of factors: Layoff spillover, AI and market re-correction. Some experts say that companies and workers are having a hard time meeting each others' needs right now.

How is the US labor force changing? ›

Population growth is the most important factor — it is projected to add about 24 million workers to the labor force, with increases in the size of the labor force in all age groups, particularly above age 30. Increases in educational attainment are projected to add about 2 million persons to the workforce.

Why is US labor participation rate so low? ›

Most of the drop in trend LFP is due to changes in the composition of the population, especially aging of the population. Looking ahead, we estimate that aggregate trend LFP will decline approximately 1 additional percentage point over the next decade, driven primarily by population aging.

Are Americans leaving the workforce? ›

In fact, a more appropriate moniker for the high quit rates over the past few years is the "Great Reshuffle." More than 44 million Americans quit their jobs in 2023, and 3.4 million quit in January 2024 alone.

Is the job market cooling off? ›

Many workers are likely to be settled in their jobs, especially after the reshuffling that occurred in 2021 and 2022. Total job openings in the US slightly declined to 8.9 million in January 2024, showing a continued cooling from the peak almost two years ago.

Are employment rates declining? ›

Is unemployment rising or falling? The unemployment rate has remained low and stable, fluctuating between 3.4% and 3.9% since Dec. 2021.

What jobs are currently declining? ›

Fastest declining occupations
2022 National Employment Matrix title2022 National Employment Matrix codeMedian annual wage, dollars, 2023
Word processors and typists43-902246,450
Watch and clock repairers49-906458,140
Roof bolters, mining47-504366,660
Cutters and trimmers, hand51-903137,040
28 more rows

Are the amount of jobs decreasing? ›

Jobs fell 16% in California since August 2022, compared to only 8% in the US. Though California has gained jobs in these firms in recent months, the trend is not yet definitive. Altogether, there are promising signs that the drivers of California's divergent—and more negative—job trends may ebb.


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