2024’s Economy Lays the Groundwork for a Steady 2025
By Nich Tremper
As summer ends, the recent slowdown in hiring may soon be coming to a close as well, according to platform data from 300,000+ businesses. Gusto’s New Hires Pay Index, a leading indicator of competition in the job market, has rebounded from its recent low for the second straight month, a sign that the job market is not longer cooling down at the pace we’ve seen throughout 2023.
- In August, pay among newly hired workers was 4.2% lower than pay for those hired this time last year, but firms in sectors hardest hit by labor shortages are still paying more for new hires compared to last year, led by Utilities (+13%), Warehousing (+9%), and Construction (+7%).
- SMB employment remained flat in August, as it had in August of last year, as seasonal hiring tapered. Healthcare & Social Assistance firms (+0.8%), Automotive companies (+0.7%), and Salons & Spas (+0.7%) all notched the highest gains in August.
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 ended August at -4.2%, meaning businesses paid new workers 4.2% less than new hires in August last year. Although still negative, this is the third straight monthly increase from the low of -6.7% in June, a sign that continually easing competition in the job market may be a thing of the past.
Hiring Trends
Across sectors, SMB employment was flat in August 2023, as it was in August 2022. Driving this change was a spike in the quit rate, as workers leaving many seasonal jobs led the employee quit rate to rise from 3.5% to 4.7% over the past month.
The layoff rate remains subdued, and at 1.3% in August 2023 sits below the 1.4% rate in August of last year. Low layoffs and firings are a positive sign that companies aren’t looking to let go of workers in anticipation of a 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]
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
