The pace of hiring remains strong for lower-earning Americans, with the hires rate for the bottom third of workers by income holding steady above its pre-pandemic baseline, according to Vanguard data. This group, earning less than $55,000 a year, has had a hires rate of 1.5% since September 2023, reflecting the ongoing recovery of lower-paying service industries from the COVID-19 shock. In contrast, higher earners have seen a slight decline in hiring, with workers in the $55,000 to $102,000 income bracket experiencing a hires rate drop to 0.5% in March from 0.6% in September. Those earning over $102,000 saw an even larger decline, from 0.6% to 0.4% during the same period.
Higher-paying industries are taking a more cautious approach to hiring compared to the surge in hiring seen in 2021 and 2022, according to Vanguard’s analysis. Health care and hospitality sectors, which tend to be lower-paying industries, are booming with significant demand for home care givers, certified nursing assistants, medical technicians, and hotel jobs. The health-care field has added over 750,000 jobs in the past year, about triple its pre-pandemic growth. The surge in travel spending has also increased the demand for jobs in hotels and other accommodation gigs. These sectors may be insulated from job cuts resulting from company experimentation with artificial intelligence, as these jobs cannot be automated.
Although the job market has cooled since 2022, the labor market remains strong and may be strengthening, according to economists. The much-anticipated recession did not materialize, and companies that had previously been cautious about hiring are now more confident about growing again. Additionally, 2024 marks the start of “peak retirement,” with the largest cohort of baby boomers reaching age 65 between now and 2030. This means companies will need to recruit a new wave of next-generation talent to replace departing workers. However, there are risks in the near term, as job openings have declined substantially from their pandemic-era peak while remaining elevated from historical levels. The current sharp decline in job openings without a corresponding increase in unemployment is unprecedented and it is unclear how long this trend can continue.
Overall, despite the challenges and risks, the labor market is showing signs of resilience and strength. The hiring rate for lower-earning Americans remains steady, while higher earners are facing a slight decline in hiring. Sectors like health care and hospitality are experiencing a boom in hiring, driven by increased demand for certain roles that cannot be automated. Economists are optimistic about the future, with indications pointing towards a potentially strong 2024 as companies regain confidence in hiring and the need for new talent increases due to the upcoming wave of retirements. However, the uncertain economic landscape presents challenges that could impact the labor market in the near future.
