Employers are hiring less but paying more
Summary
Employers are hiring fewer workers but paying higher wages, especially in industries like construction and health care where workers are in short supply. Although job growth is slow, wage increases show that the labor market remains tight in some areas.Key Facts
- Private employers added 44,000 jobs in July, down from 95,000 in June.
- Worker pay for those who changed jobs grew 7% yearly, the fastest since August 2025.
- Pay increases are strong in construction due to demand for AI-related data center projects and limited skilled workers.
- Education and health services added 36,000 jobs and continue to raise wages to attract workers.
- Labor market shows signs of tightening, with limited worker supply in some sectors.
- Lower-income workers saw after-tax wage growth of 5.2% in July, higher than for high-income workers.
- Some employers are cautious about hiring due to economic uncertainty but face persistent worker shortages.
- Wage growth alone may not cause inflation, depending on productivity improvements.
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