The pace of hiring remains strong for lower-earning Americans, holding steady above its pre-pandemic baseline even as the demand for higher-income workers has waned slightly, according to new data from Vanguard.<\/p>\n
The hires rate for the bottom third of workers by income (who earn less than $55,000 a year) was 1.5% in March, where it has largely hovered since September 2023, according to a new Vanguard analysis.<\/p>\n
The hires rate gauges the number of new hires as a share of existing employees.<\/p>\n
By comparison, it was lower \u2014 about 1.2% to 1.3% \u2014 in the months leading up to the Covid-19 pandemic, Vanguard found.<\/p>\n
\u201cThis is partly a reflection of lower-paying service industries still trying to recover from the COVID shock \u2014 a challenge since many of those workers have transitioned to higher-paying opportunities,\u201d Adam Schickling, a senior Vanguard economist, said in the analysis.<\/p>\n
Vanguard is among the nation\u2019s largest 401(k) plan administrators. Its analysis is based on new enrollments in its 401(k) plans.<\/p>\n
Meanwhile, higher earners have seen hiring decline modestly.<\/p>\n
Workers with incomes of $55,000 to $102,000 saw their hiring rate decline to 0.5% in March from 0.6% in September; those earning over $102,000 saw it fall more, to 0.4% from 0.6% during that time, Vanguard said.<\/p>\n
Higher-paying industries are \u201ctaking a considerably more cautious approach to hiring relative to the hectic 2021 to 2022 hiring surge,\u201d Schickling said.<\/p>\n
Conversely, hiring has boomed in sectors like health care and hospitality, which tend to be lower-paying industries, said Julia Pollak, chief economist at ZipRecruiter.<\/p>\n
For example, there\u2019s been significant demand for home-care givers, certified nursing assistants, medical technicians, patient transporters and other hospital jobs, she said. The health-care field has added more than 750,000 total jobs over the last year, a \u201chuge, huge number\u201d and about triple its pre-pandemic growth, Pollak added.<\/p>\n
The pandemic also created a \u201cFOMO economy\u201d that led to a surge in travel spending and therefore increased demand for jobs in hotels and other accommodation gigs, Pollak added.<\/p>\n
\u201cAnd these jobs can\u2019t be automated,\u201d perhaps insulating such workers from the leaner staffing that can result from company experimentation with artificial intelligence, she said.<\/p>\n
The job market has broadly cooled since 2022 from its scorching pace after the U.S. economy reopened.<\/p>\n
The U.S. Federal Reserve raised interest rates to their highest level in two decades to pump the economic brakes and rein in inflation. It\u2019s unclear when they might reduce borrowing costs.<\/p>\n
However, the labor market remains strong and resilient by many metrics \u2014 and may be strengthening, Pollak said.<\/p>\n
\u201cI think a lot of the data points to a pretty hot 2024,\u201d Pollak said. \u201cThe slowdown we saw in 2023 has not continued. Things have either stabilized or ticked up.\u201d<\/p>\n
Certain tailwinds seem to be propelling the labor market forward. For one, the \u201cmuch anticipated recession\u201d didn\u2019t materialize, and companies that took a wait-and-see approach regarding hiring and business investment now feel more confident about growing again, Pollak said. <\/p>\n
Additionally, 2024 is the start of \u201cpeak retirement,\u201d she said. The largest cohort of baby boomers is poised to reach age 65 between now and 2030.<\/p>\n
This means companies must recruit a big wave of next-generation talent to replace those departing workers, Pollak said.<\/p>\n
However, risks remain in the near term.<\/p>\n
Job openings have declined substantially from their pandemic-era peak, though remain elevated from historic levels. Such a sharp decline in job openings without a corresponding jump in unemployment \u201cis unprecedented, singular, and exceptional\u201d in the post-war era, Nick Bunker, economic research director for North America at job site Indeed, wrote earlier this month.<\/p>\n
\u201cBut it\u2019s not clear how much longer this miraculous trend can continue,\u201d he wrote.<\/p>\n<\/p>\n
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