Economic Reset: New Hires on the Decline

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Salary offers for new employees have unexpectedly begun to fall, possibly signaling the end of the brief era of considerable wage rise for job searchers. ZipRecruiter, an online recruitment platform, analyzed the yearly salary increases listed for more than 20,000 job postings to draw this result.

The data collected by ZipRecruiter shows that, on average, advertised salaries have decreased rather than increased this year. This is in sharp contrast to 2020, when 75% of advertised jobs paid more than the average for the year 2021. In addition, a poll by ZipRecruiter in the month of July found that a startling 48% of businesses had decreased compensation for certain jobs this year.

Advertised starting salary have dropped by as much as 30 percent in some cases. For instance, just a year ago, the average advertised salary for CDL truck drivers has fallen by 47.1%. ZipRecruiter also reports a 32.9% drop in compensation for Class A truck drivers.

Industries including technology, tourism, and transportation have seen the largest salary decreases. During the recent tight labor market, several employers went on recruiting binges and offered new recruits extraordinary compensation hikes. This tendency is in stark contrast to that.

The year 2023 appears to have been a reset year, with industries like technology laying off people and decreasing salaries.

Survey findings from ZipRecruiter are consistent with macroeconomic indicators. The Federal Reserve Bank of Atlanta’s wage growth tracker shows that the pay premium that workers receive when switching employment has been declining all year . Indeed also noticed that while interest rates have risen over the previous year due to Fed policy changes and advertised pay growth has slowed. Indeed also claimed to have seen a similar trend earlier this summer: while interest rates have risen over the previous year due to Fed policy changes, advertised pay growth has slowed.

According to data compiled by Gusto, a leading provider of payroll processing software, beginning salaries for new recruits were 5.1% lower in July 2017 compared to July 2016.  This is a helpful nugget of knowledge for enterprises of all sizes.

These indications suggest that the labor market is cooling. According to data from the Bureau of Labor information, there were 8.8 million jobs available in the United States in July, down from a peak of nearly 12 million in March 2022.

While the population may be decreasing, the job market is expanding and earnings are typically greater than they were before to Covid-19. Surprisingly, various industries, like the construction industry, the transportation sector, and the self-storage sector all  pay their entry-level workers more than the national average wage. 

Many economists and bankers attribute the cost of living increase to the recent increase in wages. However, analysts believe that the recent slowdown in job advertisements and salary rises will continue into the fall as the labor market continues to improve.  The Fed’s first priority is slowing this growth.

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