What’s in, what’s out for workers in 2024
The labor market ended 2023 on a quiet note. The most recent Job Openings and Labor Turnover report suggested the number of open jobs, and the number of people quitting their jobs, fell slightly in November. The final jobs report of 2023 revealed that employers added 216,000 jobs (more than expected) and unemployment held firm at 3.7% in December.
However, the past several years have been marked by much louder landmark moments in the labor force. For instance, many will remember 2020 as the year they went into lockdown and learned how to work remotely — or learned how to manage the risk of working alongside coronavirus.
And 2021 will likely be known as the year of the Great Resignation; 2022, the year many workers were forced to return to the office.
Perhaps 2023 can best be described as a year of tug of war between leaders and workers. Many CEOs experiencing productivity paranoia threw tantrums to try to force more workers back into office. Meanwhile, more than half a million Americans went on strike to push for better pay and working conditions.
And after years of the CEO-to-worker pay gap steadily expanding — CEOs at the top 350 U.S. firms earned 399 times what the typical worker earned in 2021 — many workers are aware and angry about the inequality in their workplaces.
Of course, it is impossible to predict the future, but here’s what may be in store for workers in 2024, according to experts.
IN: CONTRACT WORK
In the year ahead, the gig economy is expected to grow. This means we can expect even more gig workers, freelancers and consultants in 2024.
According to McKinsey, about 36% of Americans are independent workers — up from 27% in 2016. And according to the World Bank, demand for online gig work has shot up 41% between 2016 and the first quarter of 2023.
Dan Ives, senior equity research analyst at Wedbush, told Fast Company’s Jessica Bursztynsky that we will experience a “golden age for the gig economy in 2024.”
One reason for the expected expansion of the gig economy is because the demand for services like Uber, Lyft and Taskrabbit remains high.
Many traditional industries like IT, health care and legal services are increasingly working with contractors and consultants to lower their labor costs. Also, in the face of rising inflation, more workers are taking on side gigs to make ends meet.
While there are many challenges facing contract workers, a wave of legislation at the state and city levels is establishing minimum wages, better protections and more benefits for non-full-time workers.
OUT: CONSTANT HEADCOUNT GROWTH
There were many layoffs in 2023, and it’s safe to expect that there will be more in 2024.
In the first nine months of 2023, more than 600,000 employers, including tech companies Amazon, Google, Meta, Microsoft and Twitter, announced layoffs — an increase of nearly 200% compared to 2022. Despite these layoffs, the U.S. unemployment rate never rose above 4% and the economy never fell into the recession that economists feared.
One reason for layoffs may be many organizations had hired quickly in 2022. Another possible reason is that shareholders love it when companies cut workers.
What may be happening is that the cycle of hiring and firing employees is getting faster, and that the era of companies slowly and steadily growing their headcount is coming to an end.
Whitney Woodward, chief people officer at Employbridge, the largest industrial staffing firm in the U.S., says she has noticed this trend at both public and private companies.
“There’s this real pressure on all companies now to produce the numbers,” she says. “It’s part of our responsibility to help organizations be cautious on the way up because none of us want to sit as leaders delivering that message of ‘We hired too quickly. And now we have to right the ship on cost rationalization.’ ”
It’s hard to know how severe layoffs will be in 2024, but one survey from Resume Builder found that 38% of business leaders say layoffs will likely happen this year, and more than 50% say their company will likely implement a hiring freeze.
IN: AI-POWERED HIRING
But many organizations are still hiring. Staffing firm LaSalle Network estimates that three-quarters of companies plan to hire in 2024. And we expect that AI will play an increasingly important role in the hiring process of positions like these.
In the year ahead, more applicants will use tools like ChatGPT to write their résumés and cover letters. And more employers will use AI tools to recruit applicants, assess applications, and flag potential hires.
Proponents believe that AI could make the hiring process better by providing AI-powered career coaching for young workers and by catalyzing a skills-based hiring revolution.
Svenja Gudell, chief economist at the Indeed Hiring Lab, suggests that AI could help address America’s aging workforce population problem.
But others fear that AI will cause chaos and “hallucinations” in the labor market. AI hallucinations happen when a large language model creates nonsensical, inaccurate or fabricated outputs. Global market research company
Forrester predicts that this phenomenon could lead a company using AI to hire a nonexistent candidate or hire a real candidate for a nonexistent job.
J.P. Gownder, principal analyst on Forrester’s Future of Work team, tells Jared Lindzon that “AI can create all of these incredible, new, magical moments, but it also creates what we call mayhem.”
OUT: NONCOMPETE AGREEMENTS
Lastly, fewer workers will be asked to sign noncompete agreements in 2024. Critics say that noncompete clauses have historically held low-wage earners back by preventing them from getting new jobs. An estimated 30 million Americans are subjected to noncompete agreements.
However, states from California to Oklahoma to North Dakota have recently taken steps to prohibit — or significantly restrict — the use of these agreements.
In January 2023, the FTC proposed effectively banning noncompete agreements. And in May 2023, NLRB general counsel Jennifer Abruzzo argued that noncompete agreements violated the National Labor Relations Act.
In April 2024, the FTC is expected to make a final ruling on the matter.
We will experience a “golden age for the gig economy in 2024.” DAN IVES, SENIOR EQUITY RESEARCH ANALYST AT WEDBUSH
Q: What is the benefit of making a qualified charitable distribution from my IRA to a charity? A: Tax savings is a major benefit. If you’ve been saving for years in a tax-deferred IRA or 401(k), you’ll finally have to pay income taxes on the money when you take withdrawals. You need to start taking money out of the account at age 73, even if you don’t need the cash.
These required minimum distributions (RMDs) are based on your age and the balance in your account. If you’ve been saving for years, you could be hit with a big tax bill when you start to take withdrawals.
But you can avoid this tax hit by making a tax-free transfer from the IRA, called a qualified charitable distribution (QCD), to a charity. The contribution counts as your RMD for the year, but it isn’t taxable.
You can give up to $100,000 a year to charity after you turn 70½ (even though the age for RMDs is now 73). It’s a way to get a tax benefit for your charitable gift, even if you don’t itemize your deductions. (You can’t double-dip and deduct contributions made through a
QCD too.)
“Given the tax law changes a few years back, with the higher standard deduction and the limit on the state and local tax deduction, a lot more people are taking the standard deduction rather than itemizing,” says Roger Young, a certified financial planner at T. Rowe Price.
“That does play into the benefit of the QCD for people who have racked up a fairly large tax-deferred IRA over the years.”
Money you withdraw for RMDs generally increases your adjusted gross income, but the charitable transfer keeps that money out of your AGI calculation. Plus, it may help you avoid the Medicare high-income surcharge, which can boost your Medicare Part B and Part D premiums.
You don’t have to transfer the full amount of your RMD to charity, and you can usually split your contributions among several charities, although your IRA administrator may limit the number.
Note: The money must be transferred directly from your IRA to the charity. Ask your IRA administrator about its procedure and let the charity know that the money is coming so you can get a receipt. Also, you can’t make a QCD to a donor-advised fund.