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Throughout 2023, job growth has remained stronger than many predictions. As the year winds to a close, Gusto’s New Hires Pay Index, which tracks yearly changes in new hire compensation and is a leading indicator of competition in the job market, has been trending back towards neutral after declining sharply in the first half of the year, a sign that the job market is continuing its glide toward a soft landing. 

This year, SMB owners faced uncertain economic conditions and began to take a more cautious approach to hiring, as evidenced by a declining hiring rate. Layoffs, however, remain low as employers remained hesitant to let go of staff they worked hard to bring in over the last few years. This dynamic of softness in hiring but low layoffs has contributed to stability in the labor market this year – and we should expect to continue to see this trend as we enter 2024.

  • In November, pay among newly hired workers was 0.7% lower than pay for those hired this time last year, led by decreases in the index within Transportation (-5.6%), Utilities (-5.5%), and Accommodations (-4.5%) 
  • SMB employment is about flat in November, a slight tick up from -0.1% growth in November 2022. The fastest-growing industries in November were Warehousing (+3.0%), Government (+1.5%), and Transportation (+1.3%).

Gusto’s New Hires Pay Index

Gusto’s New Hires Pay Index tracks business competition for workers in real-time. It’s the change in wages paid to employees hired this month compared to a year ago. This index rose to -0.7% in November 2023, meaning businesses paid new workers 0.7% less than new hires last year, a sign of easing competition among employers looking for workers.

Hiring Trends

Across sectors, SMB employment was stable in November 2023, compared to a 0.1% decrease from November last year. Driving this change was a fall in the hiring rate, which fell from 4.9% to 4.5% over the past year, indicating business owners are not as eager to expand.

At the same time, however, layoffs are down compared to one year ago. This is a positive signal that workers aren’t actively looking to let go of workers ahead of a possible downturn.

About the data

Gusto pay and hiring trends data is derived using Gusto’s real-time payroll data from over 300,000 small and medium-sized businesses across industries and across the country. New Hires Pay Index calculates the percent change in average annualized pay between workers hired in a given month and those hired one year earlier.

Interested in learning more about these trends? Contact us at [email protected]

Tom Bowen is an Economist at Gusto, researching work and business trends in the modern economy. He received his Master’s of Economics from UC Santa Cruz. Tom currently lives in San Francisco, CA.
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