Let's start with a look at the overall level of unemployment:
Remember that in the 1950s, the economy was operating at a very high capacity. In addition, the economy as far less automated. As a result, we see a very low unemployment rate -- dropping from 4.9% at the beginning of the year to 4.2% by year's end.
All three sectors of the economy -- manufacturing, service and government employment -- saw increases. The manufacturing sector was growing because of the mammoth increase in consumer demand -- hence the increase of nearly 1 million jobs. As households were formed -- and as incomes increased -- the demand for services naturally increased as well. This explains the increase of over 1 million service jobs over the year. And finally, the decrease in government employment at the beginning of the year was the result of the end of the Korean War. However, by year end, the increased demand for government services (education, public works etc..) led to an increase in government employment.
As for wages, the level of employment led to strong wage growth:
The Federal Reserve Described the Situation Thusly:
The chart below (from the ERP) graphically depicts hours worked and wages.