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According to new data from Vanguard, the pace of hiring for lower-income Americans remains strong and remains steady above pre-pandemic baselines, even as demand for higher-income workers has eased slightly.
According to a new Vanguard analysis, the hiring rate for the bottom third of workers by income (those making less than $55,000 per year) was 1.5% in March, where it has largely stabilized since September 2023.
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The hiring rate measures the proportion of new hires to existing employees.
By comparison, it was lower in the months before the Covid-19 pandemic – about 1.2% to 1.3%, Vanguard found.
“This is partly a reflection of lower-paying service industries still trying to recover from the COVID shock – a challenge as many of these workers have moved to higher-paying jobs,” said Adam Schickling, a senior Vanguard economist, in the analysis.
Vanguard is among the largest 401(k) plan administrators in the country. The analysis is based on new enrollments in its 401(k) plans.
High-paying industries are “proceeding cautiously”
Meanwhile, there has been a slight decline in hiring among higher earners.
For workers making $55,000 to $102,000, the hiring rate fell to 0.5% in March from 0.6% in September; Those earning more than $102,000 saw a steeper decline, from 0.6% to 0.4% over that period, Vanguard said.
Industries with higher wages are “being significantly more cautious about hiring compared to the hectic hiring surge in 2021 to 2022,” Schickling said.
The healthcare and hospitality sectors are booming
Conversely, hiring is booming in sectors like healthcare and hospitality, which tend to be lower-paying industries, said Julia Pollak, chief economist at ZipRecruiter.
For example, there is significant demand for home health aides, certified nursing assistants, medical technicians, patient transporters and other hospital-based jobs, she said. The health care sector added more than 750,000 total jobs last year, a “huge, huge number” and about triple pre-pandemic growth, Pollak added.
The pandemic has also created a “FOMO economy” that has led to an increase in travel spending and therefore increased demand for jobs in hotels and other lodging establishments, Pollak added.
“And those jobs can’t be automated,” she said, potentially protecting those workers from the leaner staffing that may result from the company’s experiments with artificial intelligence.
Data suggests a “pretty hot 2024.”
The job market has largely cooled since 2022 from its rapid pace following the reopening of the U.S. economy.
The US Federal Reserve has raised interest rates to their highest level in two decades in an attempt to slow the economy and curb inflation. It’s unclear when they might lower borrowing costs.
However, the job market remains strong and resilient in many ways – and could even get stronger, Pollak said.
“I think a lot of the data points to a pretty hot 2024,” Pollak said. “The slowdown we saw in 2023 has not continued. Things have either stabilized or increased.”
Certain tailwinds appear to be driving the labor market forward. On the one hand, the “long-awaited recession” has not materialized, and companies that had taken a wait-and-see approach to hiring and business investment are now more confident about growing again, Pollak said.
Additionally, 2024 is the start of “peak retirement,” she said. The largest cohort of baby boomers is expected to reach age 65 by 2030.
This means companies will need to recruit a large wave of next-generation talent to replace departing workers, Pollak said.
However, risks remain in the short term.
The number of job vacancies has declined significantly since its pandemic-era peak, but is still above historical levels. Such a sharp decline in job vacancies without a corresponding increase in unemployment “is unprecedented, unique and extraordinary” in the postwar period, Nick Bunker, economic research director for North America at Jobsite Indeed, wrote earlier this month.
“But it is not clear how long this miraculous trend can continue,” he wrote.
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2024-05-30 13:55:03
www.cnbc.com
