Your chances of getting a new job may come down to how much you’re paid.
While the overall job market is cooling, that softening is largely concentrated among middle and higher earners. Workers in lower-paying industries remain in high demand.
That’s the takeaway from new Vanguard Group data showing the hiring rate for the bottom third of earners — or those earning less than $55,000 — is ticking up and still exceeds 2019 levels.
For those who make more, the hiring rate continues to drop and has fallen below pre-pandemic averages.
“There’s a divergent trend in terms of the hiring trends,” said Vanguard’s global head of investor research and policy Fiona Greig. Vanguard’s data, pulled from new hire enrollments in 401(k) plans, captures information about roughly 4 to 5 million workers.
This bifurcation between low and high-wage hiring, according to Greig, reflects a healthy economy.
“The US consumer is still strong fundamentally,” she said, “and so you need your front line workers to deliver product and deliver service.”
‘Still shortages of workers’
The demand for low-wage workers was reinforced this week by the latest Job Openings and Labor Turnover Survey (JOLTS), released Tuesday.
It showed that the hiring rate overall remained flat in April, but hiring activity in lower-paying industries — such as manufacturing, healthcare and social assistance, and trade, transportation and utilities — increased at the fastest clip. The latter also registered an increase in job openings in April.
The outlier there was a slowdown in hiring in leisure and hospitality, another lower-paying field. But before the most recent month, hiring in that industry had been robust.
“The JOLTS sectoral hiring data largely supports our observations from 401(k) data,” Greig wrote to Yahoo Finance following the JOLTS release.
“Even in healthcare, generally a higher paying industry, hiring appears to be concentrated in healthcare support occupations that are usually in the lower-middle income category.”
Another report Wednesday on private payrolls found that the bulk of job growth last month came from the services sector, led by trade, transportation and utilities.
“There are still shortages of workers to perform in-person jobs that are physically demanding or involve interacting with big crowds during cold and flu season,” Bill Adams, chief economist for Comerica (CMA), wrote in a note following the JOLTS release.
‘Fewer openings to fill’
The job market looks different as you move up the income ladder. For example, hiring was down by 64,000 positions for professional and business services in April, according to the JOLTS report.
“Other parts of the job market, especially white collar occupations, have seen a noticeable margin of slack return over the last two years,” Adams wrote.
The slowdown in the higher-paying fields could be signaling two things about labor supply, Greig said. First is lower attrition. For instance, professional and business services posted the biggest decline in workers quitting their jobs in April.
“Those workers are not jumping ship, they’re not quitting without the next thing lined up,” Greig said. “And so there are simply fewer openings to fill.”
Employers also may be refraining from hiring higher-paid workers to keep a lid on costs amid what Greig calls “an uncertain economic outlook.”
“We’re still waiting for this other shoe to drop and that could be putting employers in a posture of holding on expenses,” Greig said. “And if you want to hold on expenses, your most expensive workers are an easy way to do it.”
—
Janna Herron is a Senior Columnist at Yahoo Finance. Follow her on Twitter @JannaHerron.