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While job growth remains strong for low-wage workers, recent data shows it has slowed significantly for middle- and high-income earners.
A new report published by Vanguard reports sectors such as health care and hospitality are driving the bulk of job creation — particularly for roles earning less than $55,000 annually.
Hiring activities have reportedly cooled across higher-income brackets where those earning above $102,000 saw their recruitment rate dip from 0.6% in September to just 0.4% in March 2024. For workers earning $55,000 to $102,000, the hiring rate declined from 0.6% in September to 0.5% in March.
“While demand for low-paid workers remains elevated relative to pre-COVID-19 levels, hiring activity in higher-paying occupations continues to moderate,” Adam Schickling, a senior Vanguard economist, stated in the report. “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.”
NBC News reports the resilience of the labor market is largely maintained by industries that cannot easily automate jobs. The health-care sector alone has added more than 750,000 jobs in the past year, a tremendous growth compared to its pre-pandemic rate. Similarly, the hospitality industry is experiencing increased demand for jobs in hotels and other accommodations as travel spending increases.
Economic uncertainty and heightened costs due to increased interest rates by the U.S. Federal Reserve have led these sectors to tighten their recruitment activities. The cautious stance is an attempt to navigate through external economic pressures without overextending their financial commitments.
In today’s labor market, employers are more cautious of investments, and there has been a decrease in high-paying flexible work opportunities across the workforce. This is particularly true for hybrid and remote work opportunities for jobs paying $250,000 or more.
Updated U.S. Labor Market data shows that jobless claims for the week ending May 18 dropped by 8,000 to 215,000 — down from 223,000 the previous week.
