The U.S. economy added 216,000 jobs in December, slightly less than the year’s average gains. CEI experts explain why the labor market is in a good position, but employers are still wary going into 2024.
Statement by Sean Higgins, CEI Research Fellow:
The Labor Department’s report Friday that the official unemployment rate held steady at 3.7 percent is further proof that the labor market is cooling. The economy added 216,000 jobs in December, below the year’s average gains of 225,000. Employers have become picky on who they hire and workers have less leverage when it comes to selling their labor. December’s numbers were mostly static but the picture is clearer when compared to the prior year. The number of persons not in the labor force who currently want a job rose to 5.7 million in December and was up by 514,000 over the year. The number of people employed part time for economic reasons was up by 333,000 over the last year while the number of “discouraged” workers was up by 306,000. Rising wages, difficulty in finding qualified applicants and the increased prevalence of strikes and related labor issues have made employers wary and they’re pulling back.
Statement by Ryan Young, CEI Senior Economist:
This is what full employment looks like. Monthly job growth of 216,000 annualizes to a bit less than 2.6 million people, which is roughly the same as working-age population growth. That’s what we should expect with 3.7 percent unemployment and labor force participation back to pre-pandemic levels. We should not expect blockbuster 500,000-person growth numbers at this point.
Policymakers shouldn’t focus on the number of jobs so much as the types of jobs. Workers can make more money and be more productive if Washington didn’t keep businesses stuck in place with regulatory sludge. More than 700 new regulations affecting small businesses hit the books in 2023, or about two per day, and that’s actually down from previous years. The labor market is in good shape, but a deregulatory stimulus would make it even better, and without new spending.