The State of the Job Market December 2023

Written By: Michael Gardon

The Headline

• The economy added 216,000 jobs in December 2023; the unemployment rate held steady at 3.7%
• Average hourly wages rose by 0.4% (15 cents) to $34.27
• Labor productivity increased by 5.2% in Q3 2023
• The labor force participation rate decreased by 0.3 percentage point to 62.5%

What We’re Watching

Employment Trends

Non-farm payrolls added 216,000 jobs in December against economists’ predictions of 170,000 jobs gained. The Bureau of Labor Statistics’ monthly jobs report revised tallies for October and November to reflect 71,000 fewer jobs added than previously reported. 

The labor force participation rate and employment-to-population ratio each declined by 0.3 percentage point to 62.5% and 60.1%, respectively, as 676,000 workers left the labor force in December. Both metrics remain below pre-pandemic levels. 

The unemployment rate held at 3.7%. The economy added jobs in government (+52,000 jobs), health care (+38,000 jobs), social assistance (+21,000 jobs), and construction (+17,000 jobs).  

Transportation and warehousing declined by 23,000 jobs last month. Employment changed little in several industries, including leisure and hospitality, retail trade, wholesale trade, professional and business services, mining, manufacturing, information, and financial activities. 

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Retail trade declined by 38,000 jobs last month. Employment changed little in several industries, including professional and business services, information, transportation and warehousing, mining, wholesale trade, and financial activities. 

Other Ways to Measure Unemployment

The unemployment rate measures the percentage of the labor force that doesn’t have a job, has actively looked for work in the past month, and is available for work. People who are out of work but aren’t looking for jobs or able to take them are not counted in this tally. Retired people, stay-at-home parents, students, etc., don’t count toward the official unemployment rate. 

To get a sense of the real unemployment rate, it’s helpful to look at the Bureau of Labor Statistics’ Alternative Measures of Labor Underutilization. This tally includes marginally attached workers and those working part-time for economic reasons. 

As usual, the labor underutilization rate for December was a little less than twice the official unemployment rate: 7.1% vs. 3.7%. However, that’s a significant improvement on pandemic numbers, which showed labor underutilization rates as high as 22.9% (April 2020).

Hiring

The Bureau of Labor Statistics tracks the number of job openings, hires, quits, layoffs, and other separations from employment as part of its Job Openings and Labor Turnover Summary (JOLTS). 

The most recent data is from November 2023, so it doesn’t reflect the most recent fluctuations in the job market. Because of that lag time, this series is most useful as a means of understanding the job market two months ago. 

The number of job openings changed little at 8.8 million in November. Hires declined to 5.5 million and separations declined to 5.3 million. Quits ticked down to 3.5 million, while layoffs were essentially flat at 1.5 million.

Wage Growth and Productivity

Average hourly earnings increased by 15 cents to $34.27 in December 2023 and 4.1% over the past 12 months, according to the BLS. The Consumer Price Index rose 0.3% from last month, while real average hourly earnings increased by 0.2%. However, real average weekly earnings decreased by 0.2%, in part due to the decline of the average workweek by 0.3%.  

Labor productivity increased by 5.2% in Q3 2023. Output increased by 6.1%, while hours worked increased by 0.9%.

Freelance, Self-Employment, and Remote Work

Self-employment grew during the pandemic, reaching almost 11% of 157 million employed U.S. workers by April 2020, per Bureau of Labor Statistics data. Three years later, however, the share of workers who reported being self-employed had declined close to pre-pandemic levels. In April 2023, 10.03% of workers worked for themselves.

Remote work also appears to be on the decline for W-2 employees. By September 2022, 72.5% of businesses reported little or no remote work, according to the BLS, down from 60.1% a year earlier. The share of companies with an entirely remote workforce increased slightly at 11.1%, per this data.

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Job Market By State 2023

From November 2022 to November 2023, unemployment declined in 26 states and Puerto Rico and increased in 22 states and the District of Columbia. The unemployment rate was flat in two states.

Wages grew in 49 out of 50 states, plus Puerto Rico and the U.S. Virgin Islands, from June 2022 to June 2023, according to the most recent data from the BLS. Wages declined by 0.3% in Rhode Island. North Dakota and Washington state saw the highest wage growth (+4.9%), followed by Colorado (+4.8%) and Wyoming (+4.6%).

Average Weekly Wage By State

Unemployment Rate By State

Job Market By Sector 2023

Want a high-paying, secure job? For now, health care is a safer bet than tech. Although the BLS includes many technology jobs in its tally of the fastest-growing six-figure occupations, layoffs are concentrated in the tech sector. Meanwhile, occupations like typist (-38.2%), parking enforcement officer (-37.1%), and watch repairer (24.7%) are in decline—replaced by software and other automated technologies.

Fastest Growing Occupations, 2021 and projected 2031 (Numbers in thousands)

Top 20 Industries With Highest Wage Growth (2019 - 2021)

Source: U.S. Bureau of Labor Statistics, Current Employment Statistics

For more, check out CareerCloud’s list of the Highest Paying Jobs.

Fastest Declining Occupations, 2021 and projected 2031 (Numbers in thousands)

Unemployment Rate By Sector, Not Seasonally Adjusted

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