The New Hires Quality Index saw drops in both its wage index and hiring volume between June and July, with hiring volume off 0.9 percent to its lowest level since 2011.
Around each Labor Day, index creator Brad Hershbein compares the NHQI, which is built on changes in the mix of occupations hired and the demographic characteristics of people taking new jobs, with actual reported wages of newly hired workers. This year’s Labor Day release comes at a time of labor market cooling, with expected Federal Reserve interest rate cuts on the horizon.
Over the past two years, the actual inflation-adjusted wages of new hires have fallen 0.9 percent, while the NHQI wage index has risen by 0.7 percent. That’s a big change from between July 2020 and July 2022, when actual inflation-adjusted wages of new hires rose 7.0 percent and the NHQI wage index grew 1.2 percent.
Roughly speaking, Hershbein writes, the difference between the two series implies that average real wage growth of new hires, controlling for changes in their occupations and demographics, rose 5.9 percent between 2020 and 2022, but fell 1.6 percent between 2022 and 2024.
While trends suggest that wage inequality narrowed sharply over the last year, the lowest-wage new hires remained far behind, despite the strongest labor market in 20 years. With that labor market weakening, the least-paid newly hired workers risk falling farther behind.