The Labor Market, Then and Now: The First Two Decades of the 21st Century – Big Labor Market Trends

September 28, 2023

The U.S. labor market has experienced significant changes during the past two decades. Profound changes were driven by technology, business strategies, public policy, and shifting social norms. Two enormous economic shocks — the Great Recession of 2007–2009 and the pandemic recession of 2020 — also altered the economy and labor market. Collectively, these major developments transformed the nature of work and opportunities for American workers. For those with advanced education and technological skills, these labor market developments brought enhanced opportunity and increased ability to weather economic disruptions. For those with less formal education and skills training, their ability to obtain stable, family-sustaining jobs became even more challenging.

The Center for Workforce and Economic Opportunity at the Federal Reserve Bank of Atlanta has released the first article in a three-part series of articles that analyze labor market, workforce, occupational, and educational trends since 2000. These articles provide a concise graphic depiction — through tables and charts — of how American workers are experiencing the rapidly changing labor market.

Among the noteworthy findings from the article:

  • Inflation-adjusted median earnings increased 15%, from $45,095 to $52,000, in the period from 2000 to 2020. However, median earnings gaps closed for only two groups since 2000 — the gap between Asian and Pacific Islander female workers and all workers, and the gap between Asian and Pacific Islander males and white male workers. Black, Hispanic, and Native American workers suffered an outsized brunt of economic shocks and experienced longer roads to economic recovery.
  • Wages increased for all workers from 2000 to 2022.
  • Labor force participation for all workers aged 18 and older declined by 4.8% since the beginning of the century — 68.4% to 63.6% from 2000 to 2022.
  • The nation’s unemployment rate rebounded faster after the pandemic than its recovery from the Great Recession. The Great Recession caused unemployment to spike to between 9% and 10% by 2009 and 2010 and did not return to its average level of 5% until 2015. The unemployment rate during the worst of the COVID-19 pandemic peaked at 14.4% in April 2020 for all full-time workers aged 18 and older. Most workers were only on temporary layoff and employers recalled them as pandemic lockdown orders lifted, sparking a swift rebound just a year later.
  • Today, a larger percentage of Americans in the labor force have a higher education degree than at any other time in U.S. history. The proportion of workers with at least a Bachelor’s degree increased from 27% in 2000 to 40% by 2020. Two decades ago, 45% of workers had no college credits. Today, that number has dropped to 34%.

The article’s co-authors are Dr. Carl Van Horn of the Heldrich Center for Workforce Development at Rutgers University, Nyerere Hodge of the Federal Reserve Bank of Atlanta, and Stuart Andreason of the Burning Glass Institute.

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