U.S. Labor Market Update: May 2024

U.S. Labor Market Update: May 2024

Key Takeaways:

  • U.S. Employers added 272,000 jobs in May, which exceeded expectations and shows a resilient labor market.
  • Despite a declining labor force participation, May’s rate for prime-age workers (25-54) increased to 83.6%.
  • Lower layoffs and quits may mean fewer opportunities for new workers to enter the job market, causing unemployment to jump to four percent in May.

May's Jobs Report Exceeds Expectations

According to the latest jobs report, the BLS reports that employers added 272,000 new jobs in May. According to Reuters, this exceeded projections from 120,000 to 258,000. Healthcare continues to lead the job growth, which has been a consistent trend, followed by the government and leisure and hospitality sectors. With this latest report, all major U.S. industries are above pre-pandemic levels, with leisure and hospitality seeing the slowest recovery. When looking at just how resilient the job market is in 2024, healthcare, social assistance, and government accounts for 60% of all job gains. 

May Labor Market Chart 1

Chart Source: BLS

The private education and health services sector has yet to show signs of letting up with each new job report. Growth in this area can likely be attributed to the rising demand for ambulatory services with an aging population and a prevalence of chronic diseases in the U.S., such as diabetes. The cost of ambulatory care is often more cost-efficient and easily accessible for patients according to the latest ambulatory market report by Grand View Research

Based on the latest May data from the Recruitics Talent Market Index, employers are paying more to gain healthcare talent due to this rising demand. The Talent Market Index complements traditional metrics such as job openings and hiring volume by incorporating pricing data to reveal a more accurate signal of underlying demand for talent in specific job families over time, regardless of the volume of jobs posted at any given moment. While May’s healthcare index reflects a reduction in cost for the month, the overall trend line sits well above the index for all industries combined. Given the trends seen for healthcare in 2024, the high cost of attracting healthcare talent is expected to continue to last throughout the year.

May Labor Market Chart 2

Chart Source: Recruitics


Aging Population Offset by Increased Supply of Prime-Age Workers

The U.S. population is older today than it has ever been. According to PRB, the number of Americans ages 65 and older is projected to increase from 58 million in 2022 to 82 million by 2050 (a 47% increase), and the 65-and-older age group’s share of the total population is projected to rise from 17% to 23%. 

One thing that helps augment the aging population and impacts the workforce is the growing rate of prime age workers (25-54 years old). The increasing share of prime-age workers returned to pre-pandemic levels in February 2023 and has remained on an upward trend since. Despite a decline in overall labor force participation, May’s rate was 83.6%, up 0.12% from the month prior for this age group.

May Labor Market Chart 3Chart Source: St. Louis Fed

Much of the strong rebound for prime-age workers can be attributed to a steady increase in women participating in the labor force. However, when looking at other vital factors, foreign-born workers are also helping to boost this rate. 


Foreign-Born Workers Boosting the Available Supply of Talent

In April, Fed Chair Jerome Powell said that increased immigration has benefited the US economy’s job growth without triggering a big spike in wages. The BLS data for May shows that the number of employed foreign-born workers increased by 2.1% over May 2023. On the other hand, the number of native-born workers dropped by nearly 300,000 compared to the same period. 

May Labor Market Chart 4Chart Source: St. Louis Fed

According to the 2023 labor force characteristics report from the BLS, foreign-born workers were more likely than native-born workers to be employed in service occupations such as construction, maintenance, transportation, and material moving occupations. As demand for workers in these industries continues to grow, foreign-born workers may help offset the imbalance and increase the talent supply. 


Despite May’s Job Gains, Unemployment Rises to Four Percent 

While the job market is healthy, several other competing factors are under the surface. The BLS reports that unemployment for May increased to four percent for the first time since January 2022. The latest report broke the U.S. economy's two-year run of below-four percent unemployment—this record-breaking unemployment level when juxtaposed against recent trends for layoffs and discharges. Layoffs and discharges remain low and have been downward since March 2024. Lower layoffs and quits may mean fewer opportunities for new workers to enter the job market, causing unemployment.

Looking Ahead

According to CNN, stocks fell in response after the May jobs report was released. Still, all three major indexes gained for the week. Substantial jobs gains mean the Federal Reserve is unlikely to cut interest rates anytime soon. One economist is projecting that a cut is unlikely to happen until September at the earliest due to the continued growth of the job market.


Industry Spotlight: Tech

Tech Industry Remains Resilient

Tech hiring has always been challenging for recruiters, and the pandemic in 2020 exacerbated these difficulties. Following a surge in hiring, the pace slowed in 2022, leading to a wave of layoffs that has extended into 2024. Despite the ups and downs in the tech industry over the past few years, job growth in tech continues to rise. According to CompTIA’s 2024 State of the Tech Workforce report, tech job growth is projected to increase by 3.1% in 2024, reaching 9.9 million jobs. 

CompTIA's May 2024 tech report shows that new tech job postings increased over April. Following the downward trend from 2023, new and active tech job openings have seen an upswing since January 2024, indicating a bit of rebalancing for this sector. In May, the most significant increase in job posting volume was seen in Software Developer and Engineer roles, which had 7,678 more job postings than in April 2024. 

May Labor Market Chart 5Data in Thousands, Chart Source: CompTIA

According to CompTIA, the top industries looking for tech talent in May include Manufacturing, finance, and Insurance. According to the 2024 IT salary report from Robert Half, many businesses are focused on hiring for roles related to cloud, DevOps, digital transformation, security, AI, automation, system upgrades, data integration, and analytics. Despite high-profile layoffs at major tech companies like Google and Microsoft, other industries have plenty of opportunities.

Tech Talent Are Making Moves to Other Industries

It is no surprise that many industries are leaning toward technology and AI to improve their organizational efficiency, improve business outcomes, and offset labor market challenges. For example, within healthcare, the expanding use of 5G-enabled wearable medical devices for real-time remote patient monitoring and transmitting large volumes of patient data are driving the growth of technology and creating an urgent need for tech talent in this sector. As the big tech companies recover from market changes and layoffs seen in 2023, other industries may seize the opportunity to attract tech talent that has been difficult to attract in years past. Dice’s 2024 salary report indicated that 93% of tech professionals are either looking for a new job or willing to hear about a relevant new opportunity. Today’s tech environment fuels a perfect storm for employers needing tech talent to further their organizational growth. 

The final total of tech layoffs for 2023 was 263,180, according to Layoffs.fyi. Tech layoffs in 2023 were 59% higher than 2022’s total, according to the data in the tracker. Following the layoffs in the tech industry, an employee sentiment analysis from BambooHR identified that Q4 2023 had the lowest eNPS score since the height of the pandemic in December 2020. Average eNPS scores for technology have been on a steady decline since early 2023 and were likely driven by the turbulent year that was felt among many individuals in the industry.

May Labor Market Chart 6Chart Source: Bamboo

As we look ahead to 2024, according to Dice, tech professionals may seek stability and job security in new industries away from the volatility of startups. Companies with a long-standing history may have an advantage in attracting those impacted by layoffs by startups in the tech sector.

AI and Machine Learning Skills are in Highest Demand

When it comes to employment gains in tech, much of the Q1 growth was driven by the rising demand for AI and Machine learning skills. According to an IOT Analytics report that analyzed the skills listed in Q1 2024 tech job descriptions, skills in highest demand were Machine Learning and Generative AI, while cloud skills had declined.

Job volume for roles requiring AI skills has historically followed a similar trend to the tech industry as a whole. However, shortly after the public release of ChatGPT in January 2023, the decline for AI jobs began to stabilize while other tech jobs continued their descent. Demand for tech professionals escalated toward the back half of 2023 and in Q1 2024, as two percent of all U.S. job postings on Indeed mentioned AI. 

May Labor Market Chart 7Chart Source: Indeed

Organizations are doing what they can to retain tech talent who possess AI and Machine Learning skills and going to great lengths to gain their loyalty. According to a New York Post article, Tesla CEO Elon Musk said the company is giving its AI engineers a raise to deter poaching efforts by ChatGPT creator OpenAI. Tech talent with AI skills, according to The Information, are receiving personal emails and phone calls from CEOs attempting to sway them into accepting a job offer without an official interview. With such fierce competition, AI and Machine Learning roles will continue to be in high demand and influence tech's salary and benefits trends.


Rising Salaries Help Offset Eroding Benefits

The median salary of AI and Machine Learning Engineers are growing at a rate of 17% higher than that of a software engineer with a similar level of experience, according to Comprensive.io. Glassdoor’s Workplace Trends report also shows that wages and salaries are likely to continue increasing, but non-cash benefits could be phased out specifically in the tech industry. The Glassdoor benefits data suggest that this emerging trend in 2023 could extend into 2024. Based on this data, the shares of employees with access to 401k plans, dental insurance, tuition assistance, commuter assistance, gym memberships, and mobile phone discounts have declined, and the share reporting access to vision insurance has stagnated. However, there were a few benefits that were on the rise such as fertility assistance, adoption assistance, parental leave, and access to mental healthcare. 

When looking at tech salaries across industries, Dice reports that Aerospace and Defense tech salaries were the highest in 2023 compared to other industries and saw the most significant year-over-year growth (+7.4%) compared to 2022 data. This salary bump for tech talent in this sector is vital in today’s market to offset the decline in employee confidence, as noted in May’s Employee Confidence Index from Glassdoor.

Screenshot 2024-06-11 at 4.53.10 PMChart Source: Dice

A Rising Talent Market Index

Rising costs for employers are seen not only in salary trends but also in the costs of attracting employees. The Recruitics Talent Market Index shows Computer and Mathematical jobs indexing lower than all other industries, however there was a sharp rise in May 2024 for this job family. 

May Labor Market Chart 9Chart Source: Recruitics

Employers should expect costs to continue rising as demand for AI and Machine Learning skills grow and businesses evolve to focus on organizational efficiency. Only time will tell if this sector will continue to trend below all industries, but data show that tech talent continues to be in high demand.


Staying on top of the labor market is essential when creating and pivoting recruitment strategies. The talent acquisition experts at Recruitics are here to help you navigate any market condition. We utilize real-time data to pivot, innovate, and collaborate, aiming to make your approach more precise, intuitive, and efficient. Contact us today!

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