Labor trends to watch in 2024: A U.S. economic outlook and sector play-by-play
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Labor trends to watch in 2024: A U.S. economic outlook and sector play-by-play
The new year is fast approaching, and between ongoing labor shortages and financing challenges, industry leaders will need to do their homework before making critical business decisions around hiring next year. That means getting a bird’s-eye view of our current economic landscape—as well as close-up of its terrain. ?
To help prepare, here’s a look at how the U.S. economy is shaping up as we approach the new year—and a deep dive into three crucial sectors that will see movement in 2024.
POISED FOR A SOFT LANDING—BUT ANYTHING CAN HAPPEN
Economists have a solid track record of predicting labor markets and economic trends—but if the last three years have taught us anything, it’s that they’re not infallible. Back in January, more than two-thirds of economists at 23 major financial institutions anticipated a major downturn in 2023. Now, most believe the economy will skirt a recession altogether .
Still, the fundamentals of a soft landing are in place for 2024. U.S. wage growth slowed to 4.1% in the 12 months through October, the smallest such gain since June 2021 , which should help ease inflation. The slightly higher unemployment rate of 3.9%—which is not high enough to signal a crashing labor market—is good news for employers struggling to recruit workers. Meanwhile, job growth slowed in October, in part due to the United Auto Workers (UAW) strike .
CONSTRUCTION AND UTILITIES: BUILDING THE FUTURE
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Construction
Strong growth is in the cards for the domestic construction sector next year. Steady gains in employment over the past year indicate high demand for skilled workers, and this fall, U.S. construction spending hit a more than $2 billion record-high . Billions of dollars in federal funding coming from recent legislation will also jump-start over 40,000 construction projects nationwide.
However, high interest rates and tight lending standards could tamp down growth—especially as construction costs continue to climb, and labor shortages, especially for specialized electrical and other skills, delay some mega projects .
Utilities
Hiring across the utilities sector is likely to remain steady in 2024, even if employment levels have fluctuated over the past year. The Labor Department projects that solar, geothermal, and wind power generation will be the three fastest growing industries in the economy over the next decade—a boon for utilities.
But despite government incentives for green energy initiatives, financing that growth may be challenging amid high interest rates and material costs, which could lead to project delays. Though utilities are often thought of as “recession-proof,” some larger projects, including ambitious offshore wind generation projects, are on shaky ground . We could see muted growth in the first half of 2024 as smaller utilities take a “wait-and-see” approach and focus on more conventional power generation from fossil fuels.
LIFE SCIENCES: MAKING STRIDES DESPITE HURDLES
Healthcare
The healthcare sector is likely to see consistent headcount growth into next year—and organizations will need all the help they can get to address critical workforce shortages. Hospitals averaged a staggeringly low unemployment rate of 1.4% over the past three months, and burnout has led to high attrition among nurses and physicians . Still, the industry remains resilient—many providers are hiring in-house talent acquisition specialists to recruit healthcare staff.
Pharmaceutical
Pharmaceutical companies have had a difficult year: the industry is grappling with softening demand for COVID-19-related products. Moreover, tighter lending standards have made it difficult for companies to fund research and clinical trials; 37, 016 new clinical studies were registered in 2021, for example, but only 35,690 have been registered in 2023 .
Yet opportunities still abound—and demand for skilled labor among payers and contract research organizations is picking up steam. Projects focused on gene therapies, oncology, respiratory illnesses, and weight loss drugs continue to drive opportunities in the space. And many small to midsize pharmaceuticals are still looking for funding and partnerships to move their products forward in clinical trials.
TRANSPORTATION: A “FUZZY” TRAJECTORY
Automotive
Expect industry employment levels to ebb and flow before normalizing later in the year as the Big Three automakers (General Motors, Ford, Chrysler) recover from the UAW strike. Electric vehicle (EV) demand, in particular, is decelerating, spurring automakers like GM, Honda, Ford, and Tesla to delay EV investments and production timelines. While EV sales have been part of the Big Three’s aggressive strategy to gain market share, profits remain elusive. These challenges may delay hiring across the sector heading into 2024.
Aerospace and defense
The aerospace and defense sector will likely see steady gains in the coming year, fueled by heightened geopolitical tensions and emerging technologies. But several companies are reporting a shortage of workers such as engineers and data analysts, which could hamper growth. Uncertainty around future government spending is also making it difficult for defense contractors to manage capacity investments and forecast demand for next year.
KEEP A STEADY COURSE
2024 will require some swift decision-making on the part of industry leaders. But they shouldn’t get swept up in the latest jobs report or stock market swings. There’s demand in all these sectors—people always need to travel, for example, aging populations rely on healthcare and electricity usage will only grow as the energy transition advances. It’s just a matter of which companies can secure that demand, obtain the necessary funding, and find the right workers to get the job done.
Eliza Hetrick is a market research analyst at Actalent, a global engineering and sciences talent solutions firm.
Great insight, Eliza Hetrick! ?? As we navigate the complexities of the U.S. economy, it's helpful to remember what John F. Kennedy once said - Efforts and courage are not enough without purpose and direction. Let's stay informed and purpose-driven for 2024! ???