How did the labor market change in 2023?

(NewsNation) — Americans were told taming inflation could come at a high price: Their jobs.

Cooling the red-hot post-pandemic labor market is one of the main reasons the Federal Reserve started raising interest rates back in March 2022.

By September of 2022, Harvard economist Jason Furman warned to get inflation down to 2% “we may need to tolerate unemployment of 6.5% for two years.”

So far, that hasn’t happened. Instead, annual inflation has steadily ticked down, reaching 3.1% last month while the current unemployment rate of 3.7% is still near a 50-year low.

But that doesn’t mean everything is rosy.

It’s a terrible time to buy a home, people are piling up credit card debt and trips to the grocery store cost more than they did just a few years ago. And yet, the labor market has remained strong. On paper, it looks more like 2019 than 2009.

On Wednesday, the Fed’s policymakers signaled they expect to cut the benchmark interest rate next year.

The so-called “soft landing” is in view but we’re not out of the woods yet. The Fed hasn’t reached its 2% target rate and unemployment could still go up by the time it does but for now, it’s fair to say the worst fears haven’t come to pass.

Here’s how the labor market has changed over the past year.

Fewer open jobs but still more than pre-pandemic

Oct. 2023: 8.73 million

Oct. 2022: 10.47 million

2015-2019 avg: 6.36 million per month

After surging to a record 12 million in March 2022, the number of job openings has declined over the past year.

There were 8.7 million open jobs in October, down 17% from the same month a year before. But that’s still historically high. Before the pandemic, from 2015 to 2019, there were an average of 6.4 million open jobs per month.

The gradual downward trend is one sign the job market is starting to normalize. Over 6.5 million people were trying to find work in October, which means there were roughly 1.3 jobs available for every unemployed person. A year ago that number was 1.7.

Some industries are still hiring at a fast clip. There were nearly 1.5 million health care jobs and 1.2 million leisure and hospitality jobs available in October.

Continued unemployment claims up, return to previous levels

Nov. 25, 2023: 1.86 million

Nov. 26, 2022: 1.59 million

2015-2019 avg: 1.96 million

While the unemployment rate is still near a five-decade low, data suggests people are having a harder time finding jobs compared to a year ago.

Nearly 2 million people have been applying for ongoing unemployment benefits in recent weeks, the most in almost two years. That total refers to the number of continuing claims, which measures how many people have experienced a week of unemployment and then filed a continued claim. Initial claims are not included.

Continuing claims are up more than 15% compared to a year ago, marking a return to pre-pandemic levels. Between 2015 and 2019, the average number of continuing claims for a given week was around 2 million.

Hiring has slowed down

Nov 2023: 199,000 jobs added

Nov 2022: 290,000 jobs added

2015-2019 avg: 190,000 jobs added per month

U.S. employers added 199,000 jobs last month, roughly a third less than Nov. 2022 but better than economists expected.

Since January, employers have added about 230,000 jobs per month, down from nearly 400,000 a month in 2022, Labor Department figures show. That gradual cooling is what the Fed was hoping to achieve when it started raising interest rates a year and a half ago.

So far, the hiring slowdown hasn’t triggered a recession and the monthly average over the past year is more in line with what would be considered normal. From 2015 to 2019 employers added an average of 190,000 jobs a month.

Major companies have announced layoffs

2023 (through Oct): 1.64 million layoffs per month

2022: 1.47 million layoffs per month

2015-2019 avg: 1.80 million layoffs per month

Several major American companies have slashed jobs over the past year. Just this week toy maker Hasbro said it’s cutting about 1,100 jobs, or 20% of its workforce.

Earlier in the year, a wave of tech companies including Meta, Google, Microsoft and Salesforce, cut thousands of jobs each. E-commerce giant Amazon slashed roughly 18,000 positions in January before laying off an additional 9,000 workers in the spring.

There’s been an average of 1.6 million layoffs and discharges per month this year, up from 1.5 million in 2022. This year’s monthly average is still around 10% lower than what was normal from 2015 to 2019.