By the end of 2018, businesses had posted record numbers of job openings, there were over a million more vacancies than unemployed job seekers, the unemployment rate was near its 50-year low, and annual wage growth had risen to 3.3%.
As we come to the close of 2019, the job market has built on some of last year’s gains, but missed the mark in other areas. Job openings have fallen from their peak of 7.6 million to just 7.0 million. Wage growth has slowed from 3.3% to 3.1%. Monthly job gains are down to 180K from 223K in 2018. And the economic outlook is unclear.
Economic slowdowns in Europe and China, paired with uncertainty about tariffs and Brexit, have cut deeply into business and investor confidence. And that has poured cold water on employer demand for workers. And yet demand has been strong enough to drive continued improvement in key employment outcomes.
As we bid farewell to 2019, let’s look back on the year through the lens of some key labor market indicators.
1. Job growth seemed weak early in the year, but is back on track
The economy has now added 180K jobs on average per month in 2019, almost matching the nine-year average of 189K. It is particularly remarkable that we are sustaining this level of growth so late in the recovery. Of course, not all industries grew equally. Employment has fallen in retail and grown more slowly than usual in manufacturing, but grown robustly in the service sector, particularly in education and health services.
2. Unemployment fell to the lowest level in 50 years in 2019
Despite the slowdown in job growth, the pace has been healthy enough to push the unemployment rate even lower, from 3.9% at the end of 2018 to 3.5% today. Unemployment is particularly low for college graduates (2.0%) and for people with some college or an Associate’s degree (2.9%). Unemployment fell to all-time record lows in 2019 for Hispanics (3.9% in September) and blacks (5.4% in October). Several states saw their unemployment rates hit all-time record lows this year, such as Vermont (2.2%) and Utah (2.5%).
3. Wages are rising more slowly, but still far faster than inflation
Wage growth is notoriously hard to measure, especially when the composition of the labor market is changing. But one of the best available measures suggests wage growth slowed in 2019 after rising fairly steadily since 2010. With the Fed’s preferred inflation measure at just 1.6%, however, workers are still seeing real increases in their purchasing power, which are fueling growth in consumer spending.
4. More Americans in their prime working years have a job
The share of Americans of prime working age (25 to 54 years) who were employed ticked upwards throughout the year from 79.7% at the end of 2018 to 80.3% most recently. The employment rate rose particularly notably for women, who were drawn to enter the labor force by expanding opportunities and improving working conditions, and for older workers, ever more of whom continue to work past retirement age.
5. Productivity growth—a key determinant of economic growth—ticked upwards
Productivity growth, which is strongly linked to wage growth and improvements in economic well-being, has been sluggish since 2011, but 2019 brought modest improvement. That said, relatively weak productivity statistics do not support the popular notion that robots are taking our jobs. AI and automation are not boosting productivity enough to reduce the need for humans. On the contrary, 2019 was the year of the cobot—robots working alongside humans in growing numbers of warehouses around the country to fulfill rapidly rising e-commerce orders.