Job Growth Sluggish, But New Hires Are Rising—Here’s Why
At first glance, the U.S. labor market appears to be in a paradox. Job growth has slowed, yet new hires—the workers added to payrolls over the past three months—are on the rise. According to ADP payroll data, new hires accounted for 4.4% of all employees in October 2025, up from 3.9% a year ago. How can hiring be slowing while new hires are increasing? The answer lies in demographic shifts and changing labor market dynamics.
New Hires Are a Larger Share of Employment
Historically, the share of new hires fluctuates with the business cycle. In 2019, before the pandemic, new hires represented 3.9% of employment. That figure peaked in 2021 as employers scrambled to restore positions eliminated during pandemic shutdowns.
By October 2025, even with slower overall job growth than in 2023 or 2024, new hires made up 4.4% of employment, suggesting that more hiring is occurring to replace retiring or departing workers rather than to expand headcount.
Labor force participation has been declining for several years. In 2019, participation stood at 63.3%, but by August 2025, it had fallen to 62.2%. This shrinking workforce amplifies the relative share of new hires, even as total employment growth slows.
The Bureau of Labor Statistics (BLS) projects employment growth of just 3.1% over the next decade, compared with 13% in the previous decade, reinforcing that replacement hiring will likely remain a significant driver of labor activity.
Hiring Stalwarts Are Losing Momentum
Not all industries are experiencing new hires equally. Professional business services, which include lawyers, accountants, scientists, and administrative workers, have historically seen high turnover. Similarly, less-specialized jobs are easier to fill and leave, leading to higher turnover rates.
In contrast, sectors like construction have a smaller share of new hires relative to total employment.
Customer-facing industries such as education, healthcare, and leisure and hospitality have seen a decline in the share of new hires, down more than a percentage point from a year ago. Interestingly, these sectors continue to add jobs consistently, suggesting that employees in these roles are staying longer and turnover is lower.
This indicates a dual dynamic in the labor market: while some sectors are replacing workers more aggressively, others maintain stability in staffing, supporting steady job growth despite overall slowdown.
New Hire Pay Is Stalling
Despite fluctuations in new hire shares, compensation growth for these workers has slowed. Annual gross pay for new hires increased only 1.7% year-over-year in October 2025, down from 2.8% in October 2024. Median hourly pay has remained flat at $18 per hour for 16 consecutive months.
In seven of the ten major sectors tracked, year-over-year annual pay growth has been flat or negative, with the information sector seeing significant declines. This suggests that employers are focused more on maintaining staffing levels to replace departing workers than on increasing wages to attract talent.
What This Tells Us About the U.S. Labor Market
The rise in new hires amid slowing job growth signals a demographically driven labor market, rather than one responding purely to economic cycles.
Aging workforce: Approximately 36% of U.S. workers are 55 or older, up from less than 25% in 2015. This demographic shift increases replacement hiring needs.
Replacement over expansion: Employers are increasingly hiring to maintain existing workforce levels, not to expand headcount.
Labor force dynamics: The shrinking labor force reinforces the share of new hires relative to total employment, highlighting structural challenges for employers.
These trends suggest that U.S. hiring will continue to be influenced by workforce demographics, with turnover and replacement hiring playing a central role in labor market dynamics.
Implications for the Economy and Forex Traders
While this report is focused on employment, it also has indirect implications for economic activity and Forex markets:
Consumer spending: Stable or growing employment in key sectors supports household income and consumer demand.
Inflationary pressures: Slower wage growth among new hires may temper wage-driven inflation.
USD performance: Economic data on employment influences Federal Reserve policy expectations, which in turn affect USD exchange rates against currencies like EUR, JPY, and GBP.
For Forex traders, understanding the underlying dynamics of job growth, new hires, and wage trends is critical to anticipating market reactions to employment reports and central bank guidance.
Key Takeaway
The U.S. labor market is evolving. Job growth may be sluggish, but replacement hiring driven by demographic changes is keeping new hires on the rise. Employers are adapting to an aging workforce, while pay growth remains modest. Understanding these trends provides insight into both economic health and currency market dynamics, making employment data essential for informed decision-making.
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