2024’s Economy Lays the Groundwork for a Steady 2025
By Nich Tremper
As economic uncertainty rises and a growing list of companies have announced layoffs, the US jobs market ended 2022 on a slower note than it started the year – but still on a positive note. The Bureau of Labor Statistics estimated that the US economy added 223,000 jobs in December 2022, a strong number but one below the 375,000 monthly average seen across 2022. Employment data from Gusto’s Economic Data Tracker, powered by the 200,000+ companies Gusto serves, paints a similar picture of the US economy. Softness in Technology and other Professional Services sectors, reflected in slower hiring and smaller end-of-year bonuses, was offset in December by continued growth in Personal Services firms like Accommodations and Food & Beverage. Going into 2023, the questions about the US economy will center on whether this slowdown in Professional Services will spill over into other parts of the labor market.
SMB Hiring Slows to End 2022
- Companies pull back on hiring to close out 2022: SMBs ended the year by substantially pulling back on hiring, compared to both earlier in 2022 and to the same time in 2021. The hiring rate in December 2022 stood at 4.4%, compared to 5.5% in December 2021, showing that just as many forecasters expect either a recession or a “slowcession” in 2023, SMBs ended 2022 with a pullback in hiring.
- Among sectors with the largest declines were Professional Services firms, which had been growing quickly throughout the pandemic. Hiring in Technology fell from 4.6% last December to 2.6% in December 2022 (the smallest hiring rate going back three years), and hiring in Communications fell from 3.7% to 2.1%.
Wages & Bonuses Cool
- The cooling of wage growth continued in December: average hourly earnings rose just 3.9% over the past twelve months. That’s down from the peak of 6% growth in May 2022 and the first time wages have grown by less than 4% in 15 months (since October 2021).
- End-of-year bonuses shrink amid economic uncertainty: as companies prepare for what 2023 has in store, they handed out smaller end-of-year bonuses to close 2022. Overall, bonuses were down 9.7% across all industries, shrinking to an average of $526 from $582 in 2021. That contraction was largest in Professional Services firms such as financial companies and law firms, where bonuses were down an average of 10.7% from $1,591 to $1,421.
Average Bonus Sizes, by Sector, December 2021 and 2022
| Sector | Average Size of Bonus, December 2022 | Average Size of Bonus, December 2021 | Percent Change, 2021-2022 |
| All Sectors | $525.79 | $582.13 | -9.7% |
| Goods-Producing/ Logistics | $418.11 | $391.83 | 6.7% |
| Community Services | $348.57 | $364.84 | -4.5% |
| Personal Services | $239.62 | $266.22 | -10.0% |
| Professional Services | $1,421.12 | $1,591.14 | -10.7% |
| Source: Gusto platform data. |
Luke Pardue was an Economist at Gusto, researching how public policies help small businesses and their workers thrive. He received his Ph.D. from the University of Maryland, where he studied the effects of government programs on disadvantaged populations’ housing and labor market outcomes.Read More
