Could the 2024 labor market maintain the strength of 2023? Indeed Hiring Lab economists say yes — that is, if five specific conditions are met.

In the new 2024 US Jobs & Hiring Trends Report, our experts caution that, while the economic outlook for 2024 is largely positive, whether or not five trends maintain or accelerate their momentum will directly influence labor market stability in the New Year.

“Outside of some risks — the ones we know about and the ones we don’t — things look pretty good so far for what we might see next year,” says Nick Bunker, Indeed Hiring Lab Director of Economic Research for North America and author of the report. “There’s lots of indications that the probability of the economy pulling off a ‘soft landing’ has gone up.” 

But what will make that soft landing possible? Put simply, here’s what needs to happen for the 2024 labor market to go as smoothly as 2023.

Five Economic Trends That Will Shape the 2024 Labor Market 

1. Enduring worker demand

High employer demand for workers will need to continue, either through elevated job postings or worker hoarding.

While job postings and openings in 2023 are high, they have fallen from recent job market peaks. The labor market outlook for 2024 not only hinges on whether employer demand for workers continues to fall or not but also on how employers reduce their demand. Gradually cooling hiring would mean the labor market would stay steady, while a rapid descent could cause a spike in unemployment.

Additionally, Hiring Lab economists warn that a “prolonged contraction” in demand for labor could spur layoffs as employers look to shed workers. And, if employers hoard labor as many have speculated, job postings and openings could fall without an accompanying rise in unemployment. The report describes this scenario as “uncharted territory for the U.S. labor market.”

2. An influx of younger workers 

More prime-age workers need to enter the workforce to counteract the long-term drag of an aging population.  

Though the labor force grew in 2023, the population in the U.S. will continue to age out of their so-called “prime” working years, and immigration seems unlikely to accelerate next year. Without an influx of foreign-born workers, the number of prime-age workers in the U.S. will continue to decrease, shrinking the size of the talent pool employers can tap into. So while the labor force may still grow in 2024, a future dropoff in available talent is all but inevitable. 

A bar graph titled "An aging population will eventually pull down the US labor force participation rate". The graph shows a projection that between 2024 to 2030 the US will see about half of a percent decline in labor force participation rate compared to a percent growth from 2020 to 2023.

3. A steady quitting rate

Quitting will need to maintain its current pace, which is consistent with pre-pandemic rates, though elevated by historical standards. 

Although workers aren’t quitting their jobs nearly as much as they were at the end of 2021 and 2022 — as of September 2023, the quits rate stood at 2.3% — they are still quitting and job-switching at near-historic rates. There’s also been a notable rise in quitting levels from the pre-pandemic era to now in certain sectors such as leisure and hospitality, suggesting an opportunity for businesses to improve their talent retention measures.

A line graph titled "Quitting is still strong by historical standards" that shows quits as a percentage of employment from January 2001 to September 2023. From 2001 to 2019 the quit rate has been below 2.5% and rose to 3% in 2022. It is now on the decline.

4. Declining wage growth

To ease concerns about the labor market fueling inflation, nominal wage growth will need to continue to decrease — but not too much. For workers to maintain and increase purchasing power, wage growth cannot fall below the rate of inflation. 

As a result of the intersection of the three trends above — a decrease in employer demand, an increase in labor supply and depressed levels of quitting — wage growth is expected to return to the 3.5% to 4% range early next year. This is a “healthy and sustainable rate seen before the pandemic” and a marked cooldown from the January 2022 peak of 9.3%, per data from the Indeed Wage Tracker. 

As for inflation, the probability and timing of a return to its target 2% annual rate in 2024 is less clear-cut. It depends upon a number of less predictable factors, including federal monetary policy and changes in consumer spending behaviors, among others. But Hiring Lab economists remain hopeful, given the positive indications from slowing wage growth. 

5. AI adoption 

Generative AI tools may spread rapidly through the economy, boosting productivity growth and fundamentally changing the labor market.

Arguably the most dominant theme in most 2023 future-of-work discussions, AI technologies “have great potential to reconfigure a wide variety of jobs, and to potentially create many more new jobs,” as noted in the report. This may occur as demand increases for jobs related to creating AI-based tools, as well as for jobs that use them.

While it’s unlikely employers will see a trend of workers displaced by AI in 2024, a considerable upsurge in job postings that mention generative artificial intelligence (GenAI) in particular reflects the rapid rate at which adoption of AI has changed — and will continue to transform — the landscape of the way people work. 

Get the Full Hiring Lab US Jobs & Hiring Trends Report

What do these projections mean for employers and talent leaders as we head into 2024? Visit the Hiring Lab to read the full report, which offers an even deeper dive into the five key economic trends that will shape the labor market in the upcoming year and beyond, as well as key takeaways that can inform your hiring strategies.