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Visualized: The State of the U.S. Labor Market



Visualized: The State of the U.S. Labor Market

Visualized: The State of the U.S. Labor Market

This was originally posted on Advisor Channel. Sign up to the free mailing list to get beautiful visualizations on financial markets that help advisors and their clients.

The last time the U.S. labor market was this strong was in 1969.

Unemployment fell to 3.3%, incomes were soaring to historic levels, and inflation was rising at a fast clip. Like today, the Federal Reserve was tightening monetary policy to stifle inflation. Yet much of the wage increases were washed out by rising consumer prices.

The above graphic looks at the industries driving today’s robust job market using data from the Bureau of Labor Statistics. Later, we look into the impact on inflation, and whether today’s market can be sustained.

What is Driving the U.S. Labor Market?

Broadly, service-led industries witnessed the highest share of job growth in January.

Still, as the table below shows, a key part of the services sector—leisure and hospitality employment—remains under pre-pandemic levels. A similar trend is seen in retail services.

IndustryJob Growth
Jan 2023
Job Growth
Since 2020
1Leisure and Hospitality128K-495K
2Education and Health
3Professional and Business
5Retail Services30K-37K
7Transportation and
9Other Services18K-121K
10Wholesale Trade11K148K
11Financial Activities6K245K
12Mining and Logging2K-55K

Adding 1.5 million jobs since 2020 is professional and business services, the highest overall. This sector covers legal, accounting, veterinary, engineering and other specialized services.

We are also seeing strong gains in transportation and warehousing. Last year, the sector added an average of 23,000 jobs, totaling almost 955,000 over the course of the pandemic. Today, trucking jobs exceed 2019 levels and warehouse employment is roughly 50% higher.

Although manufacturing hasn’t seen the highest gains, the sector has one of the lowest unemployment rates across job sectors, at 2.4%. Yet the industry faces an acute labor shortage—if every skilled unemployed worker were to fill open job vacancies, a third of jobs in durable manufacturing would remain open.

Cooling Wage Growth

Despite rock-bottom unemployment numbers, wage growth is slowing. In January, it fell to 4.4% annually, down from a multi-decade high of 5.9% in March last year.

At the same time, wage growth falls below inflation by about 1%.

U.S. Wages and Inflation

Wage growth is carefully watched by the Federal Reserve. Typically, their annual wage growth target is 3.5% to be compatible with 2% inflation.

In the current environment, this wage growth trend serves as a double-edged sword. As wage growth slows, workers are less likely to see wages keep up with inflation. On the other hand, slower wage growth could help prevent inflation from rising in the first place—and interest rates from climbing higher.

Where is the Job Market Heading?

The question on everyone’s minds is whether today’s job market will stay resilient.

According to Fitch Ratings, slowing aggregate demand in response to higher interest rates will begin to weigh on the U.S. labor market, and the 517,000 new jobs created in January—three times the level expected by analysts— won’t last long.

Eventually, both higher borrowing costs and elevated compensation costs could weigh on corporate profits. On the other hand, the pandemic has changed the labor market. Relief legislation may continue to buoy the job market and workers may also remain scarce as people retire or leave for other reasons.

Given how unemployment serves as a lagging indicator, the material effects in the economy will likely appear before cracks begin to show in the U.S. labor market.

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Charted: Hours Worked vs. Salaries in OECD Countries

What are the average work hours and salaries in OECD countries? We look at the data for trends across regions.



A cropped chart with the average number of working hours per week, with a typical weekly wage in 35 OECD countries.

Comparing Weekly Work Hours and Salaries in OECD Countries

The Organization for Economic Co-operation and Development (OECD) is generally regarded as a collection of highly developed, high income countries. However with 38 member states from across the globe, economic prosperity can still vary widely between these nations.

To illustrate this, Truman Du from Genuine Impact charts the average weekly work hours and salaries across the OECD in 2022.

For wages, the OECD divided a country’s total wage bill by the average number of employees, accounting for inflation by using USD constant prices with a 2016 base year. Importantly, they also adjust using purchasing power parity (PPP) for private consumption of the same year.

Ranked: OECD Countries By Working Hours & Average Pay

Here’s a list of 35 OECD countries ranked by their weekly wage in 2022.

Iceland has the highest weekly wage at $1,528 in the OECD block much higher than all four of its Nordic neighbors. This results in Icelandic workers, on average, earning nearly $55/hour.

RankCountryAvg. Weekly Wage (USD)Avg. Weekly Work (Hours)Avg. Hourly Rate (USD)
1🇮🇸 Iceland$1,528.3327.87$54.84
2🇱🇺 Luxembourg$1,505.9628.33$53.15
3🇺🇸 United States$1,489.6834.83$42.78
4🇨🇭 Switzerland$1,403.7129.40$47.75
5🇧🇪 Belgium$1,247.0729.35$42.50
6🇩🇰 Denmark$1,233.2026.38$46.75
7🇦🇹 Austria$1,226.9527.76$44.19
8🇳🇱 Netherlands$1,215.8727.44$44.31
9🇦🇺 Australia$1,142.4632.83$34.80
10🇨🇦 Canada$1,135.5832.42$35.02
11🇩🇪 Germany$1,133.4725.79$43.96
12🇬🇧 United Kingdom$1,038.1729.46$35.24
13🇳🇴 Norway$1,033.7727.40$37.73
14🇫🇷 France$1,014.6829.07$34.91
15🇮🇪 Ireland$1,004.6731.87$31.52
16🇫🇮 Finland$996.8428.81$34.60
17🇳🇿 New Zealand$975.4333.62$29.02
18🇸🇪 Sweden$969.3627.70$34.99
19🇰🇷 South Korea$940.8136.56$25.73
20🇸🇮 Slovenia$907.7631.13$29.16
21🇮🇹 Italy$863.3332.59$26.49
22🇮🇱 Israel$849.1536.38$23.34
23🇱🇹 Lithuania$843.7431.23$27.01
24🇪🇸 Spain$824.2231.61$26.08
25🇯🇵 Japan$798.2530.90$25.83
26🇵🇱 Poland$709.5534.90$20.33
27🇪🇪 Estonia$667.4034.05$19.60
28🇱🇻 Latvia$656.4629.87$21.98
29🇨🇿 Czech Republic$643.7633.73$19.08
30🇨🇱 Chile$635.4237.75$16.83
31🇵🇹 Portugal$613.8831.44$19.52
32🇭🇺 Hungary$547.5932.68$16.75
33🇸🇰 Slovak Republic$505.0531.19$16.19
34🇬🇷 Greece$499.6036.27$13.77
35🇲🇽 Mexico$320.8742.81$7.49

Note: 2022 data for OECD members Colombia, Costa Rica, and Türkiye is missing from the source and has not been included.

Luxembourg, ranked second place, is the only other country with an average weekly wage that comes in above $1,500.

The U.S. ($1,490), Switzerland ($1,404), and Belgium ($1,247) round out the top five countries with the highest weekly pay in the OECD.

On the other hand, Mexican workers make around $321 a week, the lowest in this dataset.

Hourly Wages & Cost of Living

Despite the wage data using PPP-adjusted metrics, it still doesn’t fully account for discrepancies in local prices, which are influenced by complex factors like tariffs and fuel costs for imported goods, the impact of monopolies and cartels, the price of non-traded goods (energy, housing costs) and government taxes.

And while the difference in salaries seem massive, paying workers enough to meet their costs of living also plays a factor. Countries with higher weekly wages also correlate with a much higher cost of living and vice versa.

Switzerland, Denmark, and Iceland for example are in the top 10 countries with the highest cost of living compared to Mexico, which is far more affordable.

So, while it seems that an average Icelandic worker makes almost 7x what an average Mexican worker makes, the reality of how much of that wage is spent in supporting an average lifestyle in both countries is less direct.

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