This summer began with many questions surrounding the path of the economy: amid two straight quarters of declining economic output, would business owners continue to expand employment through the summer? With households and businesses battling record-high inflation, would wages continue to rise as quickly as they had been? As the summer of 2022 ends, we can use Gusto’s Economic Data Tracker to take a look back and assess where the economy stands now – and mark several important trends that have stood out over the past three months.
Employment Growth Continued, but Slowed from Summer 2021 Pace
First, we see that employment growth on Gusto’s platform remained positive through the summer, as businesses continued to expand, but slowed from the pace of expansion seen in prior summers. As shown in Figure 1, employment growth averaged 0.9% each month from June through August 2022, below the 2.0% monthly average last year and the 1.5% average in 2020. This data suggests that, in recent months, the labor market has begun to slow down from the robust rate of employment growth seen in the years since the onset of the COVID-19 pandemic.
Figure 1: Net Change in Employment (%): January 2020 – August 2022
Younger Workers Saw Fastest Employment, Wage Gains
As employment growth slowed from the quick pace of last year, there were also wide differences in how many jobs were added among workers of different age groups. Although net hiring declined for workers of all age groups compared to last year, employment growth remained strongest for teenagers 15-19 years old: employment for this age group increased 11.2% from June through August, the highest rate of any age group – although still a decline from the 25% increase seen last year. Taking account for the overall slower pace of hiring this summer, it remains the case that the surge in teen hiring seen last year continued in 2022. On Gusto’s platform, workers 15-19 years old accounted for 13.2% of all new hires from June through August, above the 8.6% share last year – and far above the 2.7% share seen in 2019. Meanwhile, from 2019 to 2022, the share of new hires aged 25-54 has fallen from 72.1% to 56.5%.
Other age groups experienced relatively larger declines in the net hiring rate, with cumulative employment growth among 20-24 year olds increasing 1.8% this summer, compared to 10.1% last year, and hiring of prime-age workers 25-54 years old increasing 0.4% (compared to 4.8% in 2021). Despite much talk of “un-retirements” of older workers earlier in the year, employment of workers 55 and older fell this summer by 0.1%, far below the 2.6% growth seen last year.
Figure 2: Net Employment Growth, June-August, by Age Group
On Gusto’s platform, younger workers have also been experiencing the fastest wage growth over the past year, as businesses turn to these workers to fill staffing needs. Workers 20-24 have experienced the largest 12-month increase in average hourly earnings, as shown in Figure 3. These workers, many of whom are new graduates in their first job after college, have seen wage gains of 14.8% since August 2021, and the 11.9% wage gains of 15-19 year-olds is close behind. These increases far outpace the 5.5% rate of earnings growth among all workers.
Figure 3: 12-Month Change in Average Hourly Earnings (%), by Age Group
Southern Cities are Seeing Wage Growth Outpace Inflation
Finally, as prices across the country grew at a historically-fast pace over the beginning of the summer, there were significant geographic differences in how workers’ earnings were keeping up with inflation. Overall, workers’ average hourly earnings grew by 5.5% over the past twelve months – faster than earlier in the year, but still below the 8.3% current rate of inflation. However, as displayed in Figure 4, there were many cities where average earnings growth outpaced the rise in prices: 16 of the top 50 metropolitan areas saw average earnings increases greater than inflation. More than half of these states are in the southern US, including Miami (12.1% wage growth), Birmingham (11.2%), Orlando (10.6%), Nashville (10.2%), and Atlanta (9.9%). This region has also been at the epicenter of The Great Resignation, and is still experiencing the highest rates of worker quits, so it is likely that workers across these cities have had to raise wages to attract and retain staff throughout the summer.
Figure 4: Metro Areas Where Wage Growth is Outpacing Inflation
