Blue-collar employment and wage gains remain hot in a cold labor market

Many blue-collar workers are heading into 2024 with a year of stronger hiring, more abundant job opportunities, and faster wage growth than some of their white-collar counterparts.

After two years of rapid growth, the U.S. job market is finally slowing as 2023 comes to a close, but Americans broadly continue to benefit from its strengths. The unemployment rate reached 3.7% last month, which is the twenty-second month in a row in which the unemployment rate has remained below 4%.

People also appear to be working or looking for jobs at higher levels than before the pandemic, with 83.3% of those aged 25-54 participating in the labor force.

But with job gains slowing from an average of 399,000 jobs per month over the past year to 232,000 jobs so far this year, workers’ historic surge in bargaining power during the post-pandemic recovery is now beginning to dwindle. The main reason: The Federal Reserve’s interest rate hikes were aimed at suppressing inflation, which peaked in the summer of 2022 above 9% and is now hovering around 3%.

Many white collar workers have cut back on employment this year. The technology sector has seen some of its steepest declines — and deepest layoffs — after correcting its pandemic-era exuberance and adjusting to higher interest rates that have made corporate borrowing costs much higher.

For jobs in software development and IT operations, data actually shows that there are fewer jobs posted now than before the pandemic. However, job postings for manufacturing roles rose a whopping 46%.

“The decline has been most pronounced in traditional white-collar jobs,” said Nick Pinker, director of the Employment Lab for Economic Research.

The gap is also evident in job advertisements by work arrangements, where work-from-home roles tend to be concentrated in white-collar jobs compared to more hands-on blue-collar work. In fact, the data shows fewer jobs are being advertised now than before the pandemic for very remote jobs, while jobs related to in-person roles remain above pre-pandemic levels.

In another sign of the relative strength of the blue-collar workforce, people with the least education saw some of the greatest growth in employment levels. Those without a high school diploma saw a 5.7% jump this year, well above the 1.1% national average for employment growth.

Their recovery makes up for some of the shortfalls they experienced during the pandemic, when workers who did not graduate from high school saw some of the worst job losses. Bachelor’s degree holders maintain their long-standing lead in employment levels despite slowing recent gains.

Overall, workers are earning more than they did a year ago.

Largely working areas such as manufacturing saw faster growth in average hourly earnings in 2023 than many primarily white-collar categories such as business and professional services. And salary gains for many blue-collar workers continue to outpace inflation — which was not the case for some white-collar professionals this year.

In the mining and logging sector, for example, wages rose 4.2% through 2023. Wages for information-based roles rose just 2.3% this year.

Of course, many blue-collar jobs are lower paying than white-collar jobs, so faster wage gains may not significantly narrow the income gap between the two groups. What’s more, it’s usually low-income people They have less savings To afford higher prices compared to higher earners, which means the economic picture is likely to remain more difficult for blue-collar workers – even those who get raises and promotions.

However, Bunker says labor market trends remain largely positive for low-income families heading into next year.

“Wage inequality has declined over the past few years because the bottom distribution has been relatively good,” he said.