2024’s Economy Lays the Groundwork for a Steady 2025
By Nich Tremper
By Liz Wilke and Tom Bowen
Millions of workers in America look forward to end-of-year bonuses. Employers use these year-end incentives to acknowledge performance throughout the year and motivate retention and performance in the year to come. Yet, bonuses have gotten smaller over the last two years, due to a stabilizing labor market and a squeeze on employers from inflation.
In 2023, year-end bonuses were down 5% across all industries relative to 2022. In December, bonuses paid by firms on Gusto’s platform averaged $2,447, compared to an average of $2,587 last December. This indicates a continued easing of labor market pressure for businesses. Though still healthy, employment and job growth have slowed through 2023, and business expectations for employment growth in the year ahead declined dramatically in 2022 and remained low through 2023.
Across most industries, bonuses were down or stable this year compared to last year.
Despite a general trend of decreasing end-of-year bonuses, workers in a few industries saw slight positive growth in their end-of-year bonuses. One of these industries was the construction sector, where high demand for services continued to increase in 2023, leading companies to increase wages and bonuses to attract more talent.
Despite layoffs and slow employment growth in 2023, one of the most resilient industries for end-of-year bonuses was the Technology sector (up 0.72% year over year), which offered relatively stable end-of-year bonuses compared to last year. After a rocky year, tech companies may be more optimistic about their business prospects going into 2024.
The share of workers who receive a bonus is also declining.
16 of 21 industries saw declines in the share of workers that received a bonus from 2022 to 2023. The largest drop was in Arts & Entertainment, with 16.9% fewer workers receiving a bonus relative to 2022. On average, 3% fewer workers received a bonus relative to last year.
Table 1: Average Bonus Sizes by Sector, December 2023 and 2022
| Sector | Average Bonus in December 2023 | Average Bonus in December 2022 | Pct Change (2022 to 2023) |
| Accommodations | $690.26 | $871.75 | -20.81 |
| Communications | $4,192.85 | $4,756.79 | -11.85 |
| Education | $1,445.78 | $1,588.05 | -8.95 |
| Non-Profits & Associations | $1,343.92 | $1,470.71 | -8.62 |
| Arts & Entertainment | $6,188.75 | $6,700.20 | -7.63 |
| Finance | $9,300.26 | $10,025.91 | -7.23 |
| Wholesale | $3,648.07 | $3,903.31 | -6.53 |
| Accounting | $2,998.85 | $3,178.44 | -5.65 |
| All | $2,447.17 | $2,587.19 | -5.41 |
| All | $2,447.17 | $2,587.19 | -5.41 |
| Consulting | $6,348.10 | $6,474.65 | -1.95 |
| Healthcare & Social Assistance | $889.29 | $896.92 | -0.85 |
| Manufacturing | $1,989.60 | $2,006.40 | -0.83 |
| Legal | $4,947.92 | $4,934.27 | 0.27 |
| Technology | $5,733.99 | $5,692.76 | 0.72 |
| Real Estate | $4,569.87 | $4,533.48 | 0.8 |
| Transportation | $1,179.15 | $1,142.62 | 3.19 |
| Facilities | $792.67 | $762.66 | 3.93 |
| Food & Beverage | $472.40 | $454.39 | 3.96 |
| Retail | $1,489.52 | $1,419.15 | 4.95 |
| Construction | $2,205.01 | $2,083.19 | 5.84 |
Table 2: Percent of employees receiving a December bonus, by year
| Sector | Pct Employees with a Bonus in December 2023 | Pct Employees with a Bonus in December 2022 | Pct change 2022 – 2023 |
| Arts & Entertainment | 11.10 | 13.36 | -16.9% |
| Accommodations | 15.78 | 17.74 | -11.1% |
| Communications | 25.45 | 27.99 | -9.1% |
| Education | 12.32 | 13.48 | -8.6% |
| Salon & Spa | 14.79 | 16.16 | -8.5% |
| Non-Profits & Associations | 17.44 | 18.91 | -7.7% |
| Consulting | 18.41 | 19.52 | -5.7% |
| Transportation | 18.77 | 19.83 | -5.3% |
| Real Estate | 17.73 | 18.66 | -5.0% |
| Technology | 16.31 | 17.14 | -4.9% |
| Manufacturing | 18.12 | 18.93 | -4.3% |
| Retail | 17.64 | 18.14 | -2.8% |
| Accounting | 23.92 | 24.46 | -2.2% |
| Food & Beverage | 7.20 | 7.36 | -2.2% |
| Sports & Recreation | 13.63 | 13.92 | -2.0% |
| Healthcare & Social Assistance | 20.18 | 20.56 | -1.8% |
| Construction | 19.25 | 19.24 | 0.0% |
| Facilities | 17.44 | 17.37 | 0.4% |
| Legal | 30.74 | 30.58 | 0.5% |
| Wholesale | 22.76 | 22.35 | 1.8% |
| Finance | 20.28 | 19.62 | 3.4% |
Conclusion
Many workers were likely disappointed with their end-of-year bonus this year as bonuses were down across all industries this year compared to last year. As we enter the new year, this trend signals a continued easing of labor market pressure for businesses.
Editor’s note: This report was updated on November 21, 2024 to correct a methodological error.
is a Principal Economist at Gusto, researching the state of work and business in the modern economy. She is a veteran of both the technology and government sectors, where she directed research programs and public spending that supports dynamic, resilient companies and workers across the globe. Liz currently lives in Washington, D.C.Read More
