According to data from Vanguard, hiring rate for low earners is still going strong, while for middle and high earners it has decreased!
For low earners in the U.S., job growth “remains elevated”, even as demand for higher-income workers has decreased slightly, according to new data from Vanguard. In March, the hiring rate for the bottom third of workers by income, those earning less than $55,000 a year, was 1.5%, while for workers earning between $55,000 and $102,000 and for those earning over $102,000 the hiring rate dropped, respectively, to 0.5% from the 0.6% in September and to 0.4% from 0,6%, based on the analysis.
The hiring rate measures the number of new hires compared to the existing workforce. Before the COVID-19 pandemic, this rate for lower-income workers was between 1.2% and 1.3%, as per Vanguard’s findings.
“While demand for low-paid workers remains elevated relative to pre-COVID-19 levels, hiring activity in higher-paying occupations contines to moderate. This is partly a reflection of lower-paying service industries still trying to recover from the COVID shock—a challenge since many of those workers have transitioned to higher-paying opportunities. Nonetheless, it’s clear that higher-paying industries are taking a considerably more cautious approach to hiring relative to the hectic 2021 to 2022 hiring surge”, said Adam Schickling, a senior Vanguard economist.
On the other hand, sectors like health care and hospitality, which typically offer lower-paying jobs, have seen significant hiring increases, said Julia Pollak, chief economist at ZipRecruiter. There is high demand for roles such as home caregivers, certified nursing assistants, medical technicians, and patient transporters. Over the past year, the health care sector has added more than 750,000 jobs, which is about three times its pre-pandemic growth, Pollak highlighted.
The pandemic also led to a “FOMO economy”, increasing travel spending and boosting demand for hotel and accommodation jobs. “These jobs can’t be automated,” Pollak added, suggesting that this may protect such workers from job cuts due to company experiments with artificial intelligence.
What To Expect For 2024
The overall job market has cooled from its rapid pace post-2022 reopening of the U.S. economy. The U.S. Federal Reserve has raised interest rates to their highest levels in two decades to slow down the economy and curb inflation. When the Fed will lower these rates remains uncertain. Despite this, the labor market remains strong and may even be strengthening, according to Pollak.
“I think a lot of the data points to a pretty hot 2024. The slowdown we saw in 2023 has not continued. Things have either stabilized or ticked up”, Pollak said.
Several factors are driving the labor market forward. For instance, the anticipated recession did not happen, leading companies that were cautious about hiring and investment to feel more confident in expanding. Moreover, 2024 marks the beginning of “peak retirement” for baby boomers, with the largest group reaching age 65 by 2030, requiring companies to recruit new talent to replace retiring workers, Pollak explained.