2024’s Economy Lays the Groundwork for a Steady 2025
By Nich Tremper
As economic uncertainty grows, firms are focusing on retaining the staff they have worked hard to find over the past three years, according to platform data from 300,000+ businesses. Gusto’s New Hires Pay Index, a leading indicator of competition in the job market, fell by 6.6% in April 2023, a sign that the labor crunch employers experienced after the pandemic continues to cool.
- In April, pay among newly hired workers was 6.6% lower than pay for those hired this time last year, led by decreases in the index within Finance (-15.5%), Insurance (-6.6%), and Other Professional Services (-5.9%).
- SMB employment grew by 1.0% in April, down from 1.7% growth in April 2022. Ahead of what is expected to be a busy travel season, firms are staffing up: the fastest-growing industries in April were Tourism (+5.9%) and Accommodations (+3.6%).
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 fell to -6.6% in April 2023, meaning businesses paid new workers 6.6% less than new hires last year, a sign of continued easing competition among employers looking for workers.
Hiring Trends
Across sectors, SMB employment increased by 1.0% in April 2023, compared to a 1.7% increase in April last year. A large driver of this change has been the fall in the rate of hiring, which dropped from 6.4% to 5.2% over the past year.
Although hiring has slowed, businesses have not let go of workers at increased levels, as the rate of layoffs and dismissals has remained near 1.0% over the past year. Firms now are mainly managing workforce size by strategically backfilling roles as employees voluntarily quit.
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]
Luke Pardue was an Economist at Gusto, researching how public policies help small businesses and their workers thrive. He received his Ph.D. from the University of Maryland, where he studied the effects of government programs on disadvantaged populations’ housing and labor market outcomes.Read More
