Following the release of the Labor Department's December jobs report, the complete picture of 2023 indicates a highly positive trend. Throughout the year, the U.S. economy generated 2.7 million jobs, bringing the total non-farm employment to 157.2 million. This figure reflects an increase of 4.9 million employed individuals since February 2020 and 14.3 million more since President Joe Biden assumed office in January 2021. Notably, the first three years of the Biden Administration saw twice as many jobs created as during the equivalent period in the Trump Presidency.
The strong job creation and low unemployment rates resulting from measures such as the sizable stimulus package passed at the start of the Biden Administration have had substantial benefits. Beyond political implications, these developments greatly enhance the well-being of numerous Americans, including those in need. Maintaining low jobless rates and a tight labor market serves as a highly effective and cost-efficient welfare policy.
Firstly, it ensures that the majority of Americans seeking or requiring employment have access to job opportunities. The unemployment rate, which stood at 3.7% in December, has been consistently under four percent for nearly two years, a feat not witnessed in over fifty years. Importantly, these low jobless rates aren't solely due to individuals leaving the workforce permanently during the pandemic. Many have returned, and their numbers have been supplemented by millions of new entrants, such as young people and immigrants.
Moreover, a low unemployment economy also facilitates improved job prospects for disadvantaged groups. In 2023, the Black unemployment rate averaged 5.5%, marking the lowest figure since its tracking began in 1972. Additionally, individuals with disabilities also experienced increased employment rates, driven by the favorable labor market conditions.
Furthermore, a tight labor market encourages higher wages, particularly for lower-paid workers, due to the principles of supply and demand. Employers, faced with difficulties in filling vacancies, have been compelled to raise wage offers. Notably, this has led to significant wage growth for low-paid workers, particularly those under 40 years of age and without a college degree, representing a notable reversal of previous wage inequality trends.
Given these positive outcomes, it is crucial to sustain low unemployment rates in the foreseeable future. The Federal Reserve's role in managing inflation while preserving these benefits underscores the importance of prioritizing a tight labor market. As policymakers make decisions in 2024, they should be mindful of the substantial advantages of maintaining these favorable labor market conditions.