Everything that needed to go right for the US labor market this year largely has, according to a report released today by Indeed. The labor market could hold up next year as well, but there are some potential storm clouds.

Indeed’s 2024 US Jobs & Hiring Trends Report: Reasons for Cautious Optimism says for the 2024 labor market to remain strong, a few trends need to hold up or accelerate:

• Demand for workers will need to stay strong, either because job postings hold firm or employers hoard workers despite weak hiring plans.
• More prime-age workers will need to enter the workforce to counteract the long-term drag of an aging population. 
• Quitting will need to stick to its current pace, a level consistent with what we saw before the pandemic but still elevated compared to historical standards.
• Nominal wage growth will need to continue to come down to ease concerns about the labor market fueling inflation. But for workers to keep adding to their purchasing power, wage growth cannot fall below the rate of inflation.
• Generative AI tools may spread rapidly through the economy and boost productivity growth.

Among the data in the report, Indeed noted job postings are down, wage growth is settling down and posts for AI-related jobs are surging.

Job postings. Indeed noted demand for workers has moderated as of late, but further reductions could be a cause for concern. The Indeed Job Postings Index is down 22.5% as of early this month from its peak at Dec. 31, 2021, and the federal government’s job openings number is down 20.6% from its March 2022 high as of September. Postings and openings remain elevated relative to historic norms, but they are at much lower level than recent highs.

Wage growth. The Indeed Wage Tracker found posted wages in October were up 4.2% from a year prior but were below the January 2022 peak of 9.3%. “If posted wages continue to slow down at roughly the rate they have for the past three months, the Indeed Wage Tracker will return to its pre-pandemic pace before the middle of next year,” the report states.

Generative AI. Only 0.003% of job postings mentioned terms related to generative AI at the beginning of 2023, but this share stood at 0.06% by the end of October — a 20 times increase. Still, only six in 10,000 job postings means generative AI jobs aren’t very common, even if they are growing rapidly. However, Indeed’s research captures job postings that mention AI, even if it's being used as a tool rather than creating AI; for example, marketers may not be creating AI tools, but they are using them.