The job market in America is experiencing a significant shift in hiring trends, particularly in relation to income levels. For lower-earning Americans, the pace of hiring has remained strong, exceeding the pre-pandemic baseline. The hire rate for workers earning less than $55,000 a year has been consistent at 1.5% since September 2023, according to Vanguard. This is in stark contrast to the hiring rate for higher-income workers, which has shown a slight decline. The data suggests that the demand for lower-paying service industries is still recovering from the impact of the Covid-19 shock, leading to a transition of workers to higher-paying opportunities.
Conversely, higher earners have seen a decline in hiring rates. Workers earning between $55,000 to $102,000 experienced a decrease in hiring rate from 0.6% in September to 0.5% in March. Similarly, those earning over $102,000 witnessed a more substantial fall from 0.6% to 0.4% during the same period. This decline in hiring among higher-income brackets can be attributed to a more cautious approach by higher-paying industries following the hiring surge witnessed in the previous years.
Industries such as healthcare and hospitality have seen a significant increase in hiring, particularly in lower-paying roles. The demand for positions such as home caregivers, certified nursing assistants, and medical technicians has surged in these sectors. The healthcare industry alone has added over 750,000 jobs in the past year, highlighting the growth in lower-paying roles. Similarly, the FOMO economy created by the pandemic has boosted travel spending, leading to an increased demand for jobs in hotels and other accommodation sectors.
Despite the cooling of the job market since the U.S. economy reopened, the labor market remains strong and resilient by various metrics. Economists are optimistic about the future, with signs pointing towards a potentially strong 2024. Factors such as the avoidance of an anticipated recession and the upcoming “peak retirement” period for baby boomers suggest that the labor market may continue to strengthen.
However, there are challenges and risks on the horizon. Job openings have substantially declined from their peak during the pandemic, although they remain elevated compared to historical levels. This decline in job openings without a corresponding increase in unemployment is unprecedented in the post-war era. Economists warn that this trend may not be sustainable in the long term, highlighting uncertainties in the job market outlook.
The dynamics of hiring and wages in America are undergoing a transformation, with lower-earning workers experiencing a strong hiring market while higher earners face a decline in hiring rates. The shift towards lower-paying industries like healthcare and hospitality has created opportunities for workers in these sectors, while the overall resilience of the labor market presents a positive outlook for the future. However, challenges and risks remain, necessitating a careful analysis of the evolving job market landscape.