September Surge: Unpacking the Latest Employment Trends and What They Mean

The September employment report revealed a surge in job creation that exceeded expectations, marking a continuation of strong employment trends. Payrolls for both July and August were revised upwards by a combined 72,000 jobs, painting an even more robust picture of the labor market than previously understood. The unemployment rate dipped to 4.1%, and the employment-population ratio ticked up. These factors point to a steady recovery, despite ongoing challenges in certain sectors.

The job gains in September reinforce the idea that the economy, though facing inflationary pressures and global economic uncertainty, remains resilient. Construction employment saw a healthy boost, and while manufacturing employment dropped slightly, overall job growth continues its impressive streak.

Notable Trends in Industry Employment

In September, construction employment saw an increase of 25,000 jobs, pushing the sector’s employment level 688,000 above where it stood before the pandemic. This consistent growth in construction is crucial, as it reflects the ongoing demand for housing and infrastructure projects across the country. With both public and private sectors investing in infrastructure, construction remains a cornerstone of economic recovery.

Additionally, the construction sector’s expansion is not only vital for jobs but also for maintaining economic stability in other industries, such as real estate and finance. The ripple effects of job growth in this area can be seen across the economy, from materials suppliers to home improvement businesses.

On the other hand, manufacturing employment dipped by 7,000 in September, leaving the industry still 137,000 jobs above pre-pandemic levels. Manufacturing remains a vital sector, but it continues to face challenges, including supply chain disruptions and shifts in global trade dynamics. The slow recovery of manufacturing employment can also be attributed to technological advancements and automation, which have reduced the need for manual labor in certain areas of production.

This decline highlights the mixed nature of the job recovery, where certain industries experience faster rebounds than others, often depending on external factors like trade policies and global demand.

Prime Age (25 to 54 Years Old) Employment Dynamics

Focusing on the key 25 to 54-year-old age group, the participation rate slightly decreased in September to 83.8% from 83.9% in August. This metric is essential because it provides a clearer view of the labor force, removing the impact of aging populations or younger individuals staying in school. While this slight dip may raise eyebrows, it’s worth noting that the participation rate for this group remains above pre-pandemic levels and near its highest point in the last two decades.

The participation rate is influenced by a variety of factors, including economic cycles, demographic shifts, and individual choices about work versus education. The slight decrease in September should be viewed within the broader context of a strong labor market where many individuals are gainfully employed.

The employment-population ratio for this same age group held steady at 80.9%, reflecting the stability in employment among prime-age workers. This ratio is a vital indicator because it measures the portion of the population that is actively employed, giving insight into the overall health of the labor market.

A steady employment-population ratio in the prime working years signals a healthy economy where most people seeking work are able to find it. It also suggests that economic growth is providing enough opportunities to support the needs of this key demographic.

Wage Growth and Its Impact

Wage growth has shown a notable deceleration after peaking at 5.9% year-over-year (YoY) in March 2022. In September, average hourly earnings grew at a rate of 4.0% YoY, marking a continued trend downward. This reduction in wage growth is largely a reflection of the normalization following pandemic-related disruptions. At the height of the pandemic, lower-paid workers were disproportionately affected, and when they reentered the workforce, wage growth appeared artificially high.

While wage growth has cooled, it remains above pre-pandemic levels, indicating that employers are still offering competitive salaries to attract and retain talent. However, the slower pace of wage increases may ease inflationary pressures, offering relief to businesses and consumers alike. For businesses, moderating wage growth can help stabilize costs, while for workers, it reflects a balancing of labor demand and supply.

Underemployment: Part-Time Work for Economic Reasons

The number of people working part-time for economic reasons saw a small decline in September, falling to 4.62 million from 4.83 million in August. This group includes individuals who prefer full-time work but are either facing reduced hours or unable to secure full-time positions. While the current level is above pre-pandemic norms, it’s still a marked improvement from the peak during the pandemic when many workers faced significant job losses and hour reductions.

Part-time employment is a key indicator of labor market health because it often points to underlying issues, such as economic uncertainty or structural shifts in certain industries. Despite improvements, the fact that part-time employment remains above pre-pandemic levels suggests that there are still lingering economic challenges to overcome.

The U-6 rate, which includes discouraged workers and those employed part-time for economic reasons, dropped to 7.7% in September, down from 7.9% in August. This rate is a broader measure of labor market slack and is often viewed as a more comprehensive indicator of underemployment. The improvement in the U-6 rate points to a gradual tightening of the labor market, though it remains higher than the pre-pandemic low of 7.0%.

This metric’s trajectory is a positive sign for the labor market, as it suggests that more workers are finding full-time employment and fewer are forced into part-time roles due to economic constraints.

Long-Term Unemployment Challenges

Long-term unemployment remains a significant issue. In September, there were 1.63 million workers who had been unemployed for more than 26 weeks, up from 1.53 million in August. Although this number has declined from the post-pandemic high of over 4 million, it is still above pre-pandemic levels.

Long-term unemployment can have lasting effects on individuals and the economy. Workers who are unemployed for extended periods often face difficulties re-entering the job market, which can result in skill erosion and financial hardship. Addressing this issue is critical for ensuring a full economic recovery.

As of September 2024, the economy has experienced positive job growth for 45 consecutive months, tying for the fourth-longest streak of sustained job creation in U.S. history. This remarkable achievement reflects the resilience of the labor market in the face of various economic challenges, from the pandemic to inflation and global uncertainties.

This streak of job growth is a testament to the underlying strength of the economy, and all indications suggest that it will continue through future revisions, securing its place in history alongside other periods of sustained economic expansion.

Box+Bestow Insights: How This Impacts Gifting and Corporate Culture

As businesses navigate the evolving employment landscape, one constant remains: the importance of maintaining strong relationships with both employees and clients. The employment trends highlighted in this report offer valuable insights into the workforce’s changing dynamics, which in turn can influence how companies approach employee appreciation and client engagement.

Personalized corporate gifting, like that offered by Box+Bestow, can play a pivotal role in fostering these relationships. Whether through gifts for employee recognition or client appreciation, tailored solutions allow businesses to demonstrate their commitment to those who contribute to their success, even as economic conditions fluctuate.

The September employment report offers a largely positive picture of the U.S. labor market, with strong job growth, a declining unemployment rate, and steady participation in the prime working age group. However, challenges remain, particularly in manufacturing and long-term unemployment. Wage growth continues to slow, offering potential relief from inflationary pressures, and the long-term job streak points to a resilient economy. As the labor market continues to evolve, businesses must stay adaptable, ensuring that they not only meet the needs of their workforce but also maintain meaningful connections with clients through thoughtful engagement strategies, like personalized gifting.