Texas Border Business
Despite remarkable resilience, Federal Reserve actions to slow inflation have had the inevitable effect of weakening the job market. There are fewer openings and slower gains than a year ago, though the trend is somewhat erratic and remains generally upward. More concerning from a long-term perspective is the mix of jobs being added and those that have been lost. Let’s explore some highlights from recent data describing how the labor market changed during 2024.
Total nonfarm payroll employment increased by 2.2 million in 2024, with an average monthly gain of 186,000. That’s significantly lower than in 2023, when the gain was 3.0 million (251,000 per month). Slowing was expected for multiple reasons (primarily the maturing of the pandemic recovery and Federal Reserve actions). However, many of my friends were predicting dire outcomes, so the fact that reasonable growth persisted must be viewed as a “win.”
The unemployment rate trended upward over the year, rising from 3.8% to 4.1%. The rate for women in December 2023 had been significantly lower than that for men (which is very unusual), but the most recent data indicates that the pattern has reversed.
As is the typical pattern, unemployment rates are lower as education levels rise. In December, some 2.4% of people with a bachelor’s degree or higher were jobless, notably lower than the 5.6% for individuals without a high school diploma. However, during 2024, the less-than-high-school-diploma category was the only one to see a reduction in the unemployment rate, while people with some college or associate degrees saw the biggest increase.
Job gains across major industry groups varied significantly last year. The private sector added almost 1.8 million jobs, while government gained about 440,000. On a percentage basis, however, the public sector grew significantly faster. Other big sources of gains were health care and social assistance, leisure and hospitality, and some (but by no means all) segments of professional and business services.
The manufacturing sector actually lost about 87,000 jobs, reversing a portion of a resurgence that has occurred in recent years. Given the high value-added and large downstream benefits that typically occur with the production of goods, it’s not a good sign that the segment is struggling. Although there were some brighter spots, declines occurred in computer and electronic equipment (including semiconductor and other electronic component manufacturing), transportation equipment, and other segments where new technologies are temporarily supplanting workers.
The “quit rate” also generally declined, indicating that workers are less confident than before (people usually quit when they have a better job or are confident that they can get one). The overall trend remains positive and demographic patterns portend a long-term labor shortage, but some signs of near-term challenges are unmistakable. Stay safe!
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Dr. M. Ray Perryman is President and Chief Executive Officer of The Perryman Group (www.perrymangroup.com), which has served the needs of over 3,000 clients over the past four decades.
