OECD Employment Outlook 2024: Robust Labor Markets and Economic Shifts Amid Transition Efforts in the United States

Labor markets worldwide have remained robust, with many nations experiencing record-high employment and low unemployment levels. By May 2024, the OECD unemployment rate was 4.9%. Notably, employment rates for women have improved more significantly than for men compared to pre-pandemic levels. Although labor market tightness is easing, it remains generally high.

In the United States, the labor market has shown stability over the past year. The unemployment rate was 4.1% in June 2024, near historic lows despite a slight uptick over the past year. The labor force participation rate held steady at 62.6%, while the employment-to-population ratio slightly decreased to 60.1%.

The US economy is expected to grow, with real GDP projected to increase by 2.6% in 2024 and 1.8% in 2025. Employment growth is anticipated to be below 1% annually, with the unemployment rate remaining around 4%.

In April 2024, the Federal Trade Commission banned non-compete clauses in employee contracts, affecting 18% of US workers. This move is expected to enhance labor market competition, fostering economic dynamism and wage growth.

Real wages are increasing year-on-year in most OECD countries as inflation declines, though they remain below 2019 levels in many places. While real wages are regaining some lost ground, profits are cushioning the rise in labor costs. There is potential for further wage increases without triggering a price-wage spiral.

In the US, average real wages grew by 1% annually in Q1 2024 but were still 0.8% below Q4 2019 levels. Despite the federal minimum wage remaining unchanged since 2009, many states and localities have raised their minimum wages. By May 2024, the employment-weighted minimum wage in the US was 24% higher in nominal terms than in May 2019, resulting in a 1.1% real increase compared to an 8.3% median increase across OECD countries with statutory minimum wages.

The transition to net-zero emissions in OECD countries is expected to have a modest impact on overall employment. Some jobs will be lost, new ones will emerge, and many existing roles will transform. Across the OECD, 20% of the workforce is in green-driven occupations, which support green activities but don’t directly reduce emissions. Conversely, 7% work in greenhouse gas (GHG)-intensive jobs.

In the US, 20.6% of the workforce is employed in green-driven roles, with 17.4% in truly “green new or emerging occupations.” About 4.8% of US employment is in emission-intensive occupations. Indiana has the highest share of green-driven jobs, while Wyoming has the most GHG-intensive roles. Men and older workers are more likely to be in green-driven and GHG-intensive occupations.

Addressing climate change through net-zero transitions is crucial, considering the employment costs of inaction. Currently, 18% of US workers, especially those in outdoor and heavy industry jobs, suffer from significant heat discomfort, impacting their health and productivity.

From 2012 to 2021, effective carbon taxing increased across the OECD, while per-capita carbon emissions from energy use declined in most countries. However, carbon taxes, emissions trading systems, and fuel excise taxes have often had a regressive impact, affecting low-income households reliant on high-emission consumption items.

In the US, effective carbon rates rose from approximately $6.5 to around $16.2 per tonne of CO2 between 2012 and 2021, primarily due to higher fuel excise taxes. US carbon pricing remains well below the OECD average of about $45.4 per tonne, reflecting the US approach to climate mitigation, which emphasizes grants, loans, tax provisions, and other incentives to promote clean energy and technology. This strategy is embodied in the Inflation Reduction Act of 2022, which allocates $370 billion to enhance energy security and accelerate clean energy transitions.

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