The labor market recovered quickly from the massive pandemic induced downturn in early 2020. The labor market regained its pre-pandemic strength within a few short years. Moreover, it stayed strong with low unemployment and rising wages. This stability helped to eventually overcome the onslaught of supply side driven inflation, so that wages outpaced inflation in 2023 again.
Jobs came back with eyepopping speed after the pandemic. Initially, the labor market shrank by 21.9 million jobs in March and April 2020. Thanks to massive government interventions to help people pay their bills and businesses to stay open and keep their employees, hiring started anew in May 2020. Additional government support in early 2021 helped the labor market to maintain its momentum in the face of supply side shocks, higher oil prices and sharply higher interest rates. The hiring boom brought the total number of jobs back to where it was in February 2020 by June 2022 – two years and two months after the pandemic induced recession ended. In comparison, it took more than twice as long – four years and 11 months — after the Great Recession ended in June 2009 to regain all of the jobs lost during that recession. And, job gains have not stopped, so that there were 4.9 million more jobs in December 2023 than in February 2020. The labor market has been consistently strong for several years now.
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