During 2022, interest rates and inflation soared while the stock market plummeted. However, this turmoil did not spread over into the labor market, which remained steady and consistent.
So, what can we expect from the U.S. job market in 2023, and what is going to happen to the U.S. economy?
U.S. Labor Market 2023
While global economies suffered high inflation, interest rate rises, and the threat of recession, this did not affect the American job market. By the end of 2022, according to a Forbes report, unemployment rates were lower than before the onset of the Coronavirus pandemic.
While some enterprises implement hiring freezes or make mass layoffs, other innovative and forward-thinking businesses are quickly mopping up the newly available talent. Furthermore, with the possibility of an economic downturn in the United States in 2023, unsatisfied workers are taking the opportunity to switch employers now.
Therefore, it is crucial for employers to consider staff retention strategies in 2023. Retention strategies could consist of internal rotation and upskilling through continued learning, professional development, and employee certifications.
Flexibility and hybrid working policies are attracting greater focus, following successful remote working during the pandemic. Workers are more focused on work/life balance and hybrid work schemes, including the four-day work week, which could be the solutions to keeping staff happy and motivated.
These American labor market conditions are not just the Forbes Economists. The U.S. Bureau of Labor Statistics reported an increase of job openings at the end of 2022 (up to 11 million). According to the ADP National Employment Report, released in January 2023, U.S. private employment added 106,000 jobs in January. with mid-size and large companies adding the most employees.
Booming industries include leisure and hospitality, adding 95,000 employees, financial activities, adding 30,000 employees, and manufacturing, adding 23,000 employees. The largest reductions of employees were in trade, transportation, and utilities, down 41,000 employees, and the construction industry, down 24,000 employees.
U.S. Salaries in 2023
A CNBC article highlights that employers in America are planning to increase average salaries by 4.6%, up from the 4.2% average pay rise in the United States in 2022.
Find an average salary by group:
- Administration
- Architecture and Engineering
- Building Maintenance
- Business and Financial Operations
- Community and Social Service
- Computer and Mathematical
- Construction
- Design and Media
- Education
- Farming
- Food Preparation and Serving
- Healthcare Practitioner
- Healthcare Support
- Installation and Repair
- Legal
- Life, Physical, and Social Science
- Management
- Manufacturing
- Personal Care
- Protective Service
- Sales
- Transportation
U.S. Economy Outlook 2023
According to Bank of America Global Research, the year ahead will see a fight against rising inflation through higher interest rates. If supply chain improvement and geopolitical stability cannot ease the price pressure on goods, this may lead to a mild economic downturn in 2023.
If things go right, Head of U.S. Economics, Michael Gapen, predicts inflation could decline to 2.8% year on year, by the end of 2023.
Mortgages and the U.S. Housing Market
Houses became less affordable in 2022, as interest rates rose above 6%. While house prices remain above pre-pandemic levels, in 2023, house prices could decline by between 5-10%.
Combined with a decline in financial asset prices, household spending could become depressed, further contributing towards an anticipated recession.