Many blue-collar workers are riding into 2024 on a year’s worth of stronger hiring, more plentiful job opportunities and faster pay growth than some of their white-collar counterparts.
After two years of rapid growth, the United States’ job market is finally slowing down as 2023 draws to a close, but Americans broadly continue to benefit from its strengths. Unemployment clocked in at 3.7% last month, the 22nd straight month when the jobless rate has held below 4%.
People also appear to be working or looking for jobs at higher levels than before the pandemic, with 83.3% of those between the prime ages of 25 to 54 participating in the labor force.
But with job gains slowing from an average of 399,000 a month over the course of last year to 232,000 so far this year, workers’ historic surge in bargaining power during the post-pandemic rebound is now on the wane. A top culprit: higher interest rates from the Federal Reserve meant to quell inflation, which peaked in summer 2022 above 9% and is now hovering around 3%.
Many white-collar employers have cut down on hiring this year. The tech sector has seen some of the sharpest pullback — and deepest layoffs — after correcting for a pandemic-era glut and adapting to higher interest rates that have made corporate borrowing costs much higher.
For jobs in software development and IT operations, Indeed data shows there are fewer postings now than there were before the pandemic. Job postings for manufacturing roles, however, are up a whopping 46%.
It’s been a much starker pullback in white-collar, traditional office jobs.
Nick Bunker, Director of economic research at the Indeed Hiring Lab
“It’s been a much starker pullback in white-collar, traditional office jobs,” said Indeed Hiring Lab Director of Economic Research Nick Bunker.
The divide also shows up in job postings by work arrangements, where work-from-home roles tend to be concentrated in white-collar jobs compared to more hands-on blue-collar work. Indeed data shows fewer job postings now than pre-pandemic for highly remote jobs, whereas those for more in-person roles remain above pre-pandemic levels.
In another sign of the blue-collar workforce’s comparative strength, people with the least education have seen some of the steepest growth in employment levels. Those without a high school degree saw a 5.7% jump this year, well above the national average of 1.1% employment growth.
Their rebound makes up some of the shortfall suffered during the pandemic, when workers who didn’t graduate high school saw some of the worst job losses. Bachelor’s degree holders maintain their long-running edge in employment levels despite slower recent gains.
Overall, workers are making more than they did a year ago.
Largely blue-collar fields like manufacturing have seen faster average hourly earnings growth in 2023 than many primarily white-collar categories like business and professional services. And many blue-collar workers’ pay gains continue to outpace inflation — which hasn’t been the case for some white-collar professionals this year.
In the mining and logging sector, for example, wages grew by 4.2% over 2023. Pay for information-based roles has risen by only 2.3% this year.
Of course, many blue-collar jobs are lower paid than white-collar ones, so faster wage gains may not narrow the earnings gap substantially between the two groups. What’s more, lower earners typically have less savings to endure rising prices than do higher earners, meaning the economic picture likely remains more difficult for blue-collar workers — even those landing raises and promotions.
Still, Bunker says labor market trends remain largely positive for lower-earning households heading into next year.
“Wage inequality has come down over the past few years because that bottom distribution has done relatively well,” he said.