The pace of hiring in the US is ticking up, boosted by the employment of lower-paid workers, even as demand for middle-and top-income earners continues to soften, according to Vanguard Group Inc.

Proprietary data on enrollments in 401(k) retirement plans show that the hires rate — which refers to new hires as a share of existing employees — climbed to 2.8% last month, the highest since October 2022, and up from 2.4% in March.

In particular, hiring among the bottom third of earners — those with annual wages below $55,000 — generally surpassed that of higher-paid workers, Vanguard said in a report dated May 28.

“This is partly a reflection of lower-paying service industries still trying to recover from the Covid shock — a challenge since many of those workers have transitioned to higher-paying opportunities,” said Adam Schickling, a senior Vanguard economist. “Nonetheless, it’s clear that higher-paying industries are taking a considerably more cautious approach to hiring relative to the hectic 2021 to 2022 hiring surge.”

The hires rate is calculated at the firm level and is based on new enrollments in 401(k) retirement plans administered by Vanguard divided by the number of all active 401(k) plan participants in a given month. The company is also able to infer participants’ incomes from data on 401(k) savings-rate elections and realized contributions.

This dataset is more granular than the Job Openings and Labor Turnover Survey published by the Bureau of Labor Statistics, which doesn’t provide a breakdown by earnings level. Vanguard retirement plan participants typically have higher incomes than the overall US population.

The Vanguard report also showed that there has been a modest uptick in hiring among younger workers, while hiring rates have been flatter for older workers in recent months. Still, the differentiating factor in hiring trends right now is income, rather than age, said Fiona Greig, Vanguard’s global head of investor research and policy.

“Workers of all ages are seeing a rise in hiring, but it’s really just lower-income workers who are driving the increase,” she said. “The job market has softened for the top two-thirds of earners.” 

This article was provided by Bloomberg News.