Your work bonus could be much smaller this year
Worker bonuses tumbled at end of 2023 as labor market eases
December jobs report wasn't as strong as initial reaction suggested: Michelle Girard
NatWest Markets U.S. head Michelle Girard breaks down the December jobs reports and discusses the impact of the Fed's next rate decision on 'Making Money.'
Millions of workers could be in store for a smaller year-end bonus as still-high inflation continues to squeeze employers.
In December, the average bonus paid by U.S. firms was about $2,145 – a 21% decline from the same time one year ago, according to new data published by payroll software company Gusto. That represents an even steeper drop of 40% when compared with 2019.
"This indicates a continued easing of labor market pressure for businesses," the study said. "Though still healthy, employment and job growth have slowed through 2023."
THE NUMBER OF HIGH-PAYING JOBS IS DWINDLING
Bonuses fell across every industry last year. The technology sector proved to be one of the most resilient industries for year-end bonuses, even though it was besieged by a wave of layoffs at the start of the year. Bonuses fell just 3.8% in the tech sector compared with last year, suggesting that these companies "may be more optimistic about their business prospects going into 2024."
In December, the average bonus paid by U.S. firms was about $2,145 – a 21% decline from the same time one year ago. (iStock / iStock)
At the other end of the spectrum is the transportation sector, which saw bonuses plunge 36% last year. The sharp drop is a probable indicator of easing conditions in the transportation and warehousing sectors – likely the result of decreased shipping demand.
There were also notable year-over-year declines in bonuses given by the retail industry (down 16%), bars and restaurants (down 26.1%) and health care and social assistance (down 15.9%). These sectors have struggled the most with a persistent worker shortage over the past year; the slowdown in year-end bonuses may be a sign that those labor challenges are coming to an end.
US ECONOMY ADDS 216K JOBS IN DECEMBER, BEATING EXPECTATIONS
Not only were bonuses smaller, but there was a decline in the share of workers that received them. Nearly three-quarters of industries saw a decrease in the number of workers that received a bonus at the end of the year. The largest drop was in arts and entertainment, with 18.5% fewer workers receiving a bonus relative to 2022.
Attendees at a health care career fair at Cape Fear Community College in Wilmington, North Carolina, on Feb. 28, 2023. (Allison Joyce/ Bloomberg / Getty Images)
On average, 2.7% fewer workers received a bonus relative to last year.
"Many workers were likely disappointed with their end-of-year bonus this year as bonuses were down across all industries this year compared to last year," the study said. "As we enter the new year, this trend signals a continued easing of labor market pressure for businesses."
GET FOX BUSINESS ON THE GO BY CLICKING HERE
The labor market has remained historically tight over the past year, defying economists' expectations for a slowdown. Although economists say it is beginning to normalize after last year's blistering pace, it is nowhere near breaking.
The report comes shortly after the Labor Department reported that the economy added 216,000 jobs in December, pointing to a gradually slowing labor market.