When Will the Job Market Get Better? The 2024 Election Could Decide
Updated December 2024 to a 4 Part Series Beyond the Election:
Part 1 Released December 17, 2024
The U.S. job market is facing uncertain times, and the upcoming 2024 election may be a turning point that determines its future trajectory. With inflation high, wages struggling to keep up, and millions still out of the labor force post-pandemic, many are asking: Will the job market get better in 2024 in the USA? While both candidates promise economic recovery, the data shows contrasting strategies and results between the Trump administration’s pre-pandemic job growth and the Biden administration's efforts to recover in the years since.
Let’s take a closer look at how the job market evolved under both administrations, what each candidate’s approach could mean, and why a potential Trump administration might have a better outlook for the job market than a Harris-led continuation of Biden’s policies.
The Real State of the Job Market: Beyond the Unemployment Rate
The current low unemployment rate, often highlighted by the Biden administration, doesn’t tell the whole story. The unemployment rate may be down to around 3.4%, but this figure doesn’t account for the 4.7 to 7 million Americans who are not actively participating in the labor force due to long-term effects of the pandemic and economic challenges. If we include those workers, the true unemployment rate is estimated to be between 6.5% and 7.7%. Further leading to a falsified unemployment metric is an estimated 6% of Americans who are working multiple jobs. This contributed to a misleading unemployment metric because each person taking an additional job counts as a job filled which is used in the unemployment calculation.
Under the Trump administration, pre-pandemic unemployment hit record lows of 3.5%, bolstered by a steady streak of job growth across various sectors. This included notable gains in healthcare, business services, and manufacturing. However, post-2020, as the economy grappled with lockdowns and restrictions, a significant portion of the workforce didn’t return, contributing to today's labor shortages and inflated unemployment figures when adjusted for participation.
Will the Job Market Get Better in 2024?
A Trump Administration Outlook
Trump’s economic strategy focused on stimulating growth through corporate tax cuts, reduced regulations, and place-conscious policies, aiming to balance economic opportunities across different regions. In his term, around 6.7 million jobs were created, many of which spurred growth in consumer spending and national economic health(how the trump administr…). Trump’s proposed agenda for 2024 appears aligned with these strategies, emphasizing economic expansion through tax relief and regulatory reduction.
A Harris-led Administration Outlook
On the other hand, Harris has signaled a continuation of Biden’s policies, which focus on federal support, sector-specific investments, and wage increases for low-income workers. While these policies have had some success, especially in federal employment and sectors like clean energy, inflation remains high, and real wage growth has lagged behind. Despite over 15.7 million jobs “recovered” under Biden, purchasing power has declined, with inflation often outpacing wage gains. Biden’s economic policy, continued under Harris, may not be enough to address these inflationary pressures effectively.
The Impact of Inflation on Wages and Job Growth
Wage Trends and Inflation’s Toll
Wages have increased nominally since 2021, but real earnings are down as inflation has eroded purchasing power. For instance, even with weekly paychecks increasing on average by $147, inflation means that today’s wages actually buy $47 less than they did a few years ago(bidenomics). To cope, many Americans are taking on second jobs, which artificially inflates job statistics but does little to boost real earnings or economic stability.
In comparison, wages under the Trump administration experienced consistent growth, with production and non-supervisory employees seeing more than 15% wage increases over his term with a 1.3% - 2.4% inflation rate. Inflation was more contained, allowing for real wage growth that fueled consumer confidence and spending. With economic strategies focused on lowering corporate taxes, Trump’s policies were seen to stimulate reinvestment in business, translating to better wages and increased hiring.
How Long Will It Take the Job Market to Recover?
Under a Trump administration, we could expect to see faster recovery due to a likely focus on inflation control through tax and regulatory measures designed to stimulate business growth. Harris’s approach may maintain current levels but seems less likely to reduce inflation quickly, potentially prolonging recovery timelines.
Job Creation and Labor Shortages: Two Different Approaches
Job Creation Under Trump vs. Biden
Trump’s Economic Growth Strategy
The Tax Cuts and Jobs Act (TCJA) lowered the corporate tax rate from 35% to 21%, aiming to spur growth, job creation, and wage increases. Proponents credit this policy with contributing to the creation of hundreds of thousands of jobs and a surge in consumer spending. Moreover, these cuts resulted in corporations increasing reinvestment by 20% to expand operations, benefiting workers and fueling further job market growth. Trump’s policies focused on broad economic stimulation, reducing regulatory burdens to increase business flexibility.
Biden and Harris’s Sector-Specific Approach
The Biden administration, and by extension Harris, has instead focused on sector-specific initiatives like the CHIPS and Science Act and the Inflation Reduction Act. While these programs are expected to boost employment in green energy and technology sectors, their impact is somewhat limited to specific fields. This approach leaves broader economic sectors relatively untouched and may not result in balanced job growth.
How Long Will the Worker Shortage Last?
Worker shortages remain a significant concern, particularly in sectors like healthcare, hospitality, and manufacturing. Estimates indicate that long-term shortages could persist until 2028 as older workers retire and fewer younger workers enter high-demand fields.
What Would Trump’s Return Mean for Worker Shortages?
By enhancing immigration restrictions, simplifying hiring practices, and implementing business-friendly policies, a Trump administration may alleviate some of the strain on labor shortages. The focus on corporate tax reductions could also incentivize businesses to offer competitive wages, attracting more workers back into the labor force.
How Will Harris’s Policies Affect Shortages?
Harris, likely upholding current policies, may not implement significant changes to reduce shortages. Current administration policies on minimum wage increases for federal employees and federal contractors aim to boost lower-wage employment but may not be sufficient to bridge workforce gaps in highly skilled areas. Therefore, worker shortages, particularly in specialized sectors, could persist for the foreseeable future.
Will the 2024 Election Decide the Job Market’s Future?
The upcoming election could profoundly impact how soon we see job market improvements. Here’s a summary of what each candidate’s policies could mean for job recovery, wage growth, and labor force participation:
If Trump Wins
Job Growth and Inflation: By continuing with tax cuts and reducing regulations, Trump could foster an environment where businesses are motivated to expand and hire, potentially easing inflation and supporting wage growth.
Labor Force Participation: With policies encouraging corporate growth, Trump may see an increase in labor force participation, addressing the ongoing worker shortage more effectively than targeted wage increases.
If Harris Wins
Sector-Specific Job Growth: Harris’s continuation of Biden’s approach would likely lead to job creation in select sectors like technology and clean energy, though it may not address broader economic needs.
Inflation and Wage Growth: Wage increases may be slower, with inflation continuing to dampen purchasing power. A focus on targeted wage increases may not generate the same economy-wide impact on employment or real wage recovery.
Conclusion: Preparing for the Election’s Impact on Jobs
So, will the job market get better in 2024 in the USA? The answer largely depends on the 2024 election. While both candidates have clear visions for economic growth, the Trump administration's approach is more likely to stimulate faster job growth, control inflation, and address worker shortages by creating a broader business-friendly environment. In contrast, Harris’s continuation of Biden’s policies may benefit specific sectors but likely won’t address the economy-wide challenges as quickly.
In times of economic uncertainty, staying informed and proactive is essential. Whether the job market improves may ultimately hinge on which policies prevail after the election. Preparing now by upskilling, exploring new industries, and diversifying income sources could be valuable steps to safeguard your career against potential market fluctuations.
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