What Vanguard data show

Labor market insights

September 29, 2026

Private-sector employment contracted by 5,000 jobs in September 2026

Based on anonymized Vanguard 401(k) retirement plan participant data.

“Amid continued soft hiring, private-sector employment posted a small decline in September. The weakness remains concentrated in recruiting rather than layoffs, leaving new entrants and job seekers facing the most difficult conditions. With labor supply growth running well below its historical pace, the breakeven rate of job growth has fallen sharply, and we expect month-to-month readings to dip into negative territory without implying a broader downturn.”

Adam Schickling, CFA
Vanguard Senior Economist

Hires rate: Net hiring turns negative as gross hires keep falling

What we’re seeing: Weak hiring remains the defining feature of today’s labor market, and conditions softened further in September. The gross hires rate continued its decline, falling below the trough reached during the COVID-19 pandemic. That decline was paired with a modest increase in the separations rate. Together, those moves pushed the net hires rate into negative territory for the first time since 2009.

About the data: The Vanguard employment data track new enrollments and separations in Vanguard-administered 401(k) retirement plans. The Vanguard employment series adjusts this data to improve comparability with the broader U.S. labor market. During periods of extreme job losses, such as the COVID-19 pandemic, the Vanguard employment series will have tracking error due to underrepresentation in the face-to-face service sector. The Vanguard net hires rate is the unadjusted level of net hires (new enrollments minus separations) divided by the number of all active 401(k) participants in Vanguard-administered plans. The gross hires rate is new enrollments divided by the number of all active 401(k) participants, while the separations rate is separations divided by all active 401(k) participants.

Hires rate

Notes: New enrollments are recorded based on their employer-provided hire date rather than their retirement plan enrollment date, which often comes later. All series are seasonally adjusted using the X-13ARIMA-SEATS method. The two vertical shaded bars indicate economic recessions, as identified by the National Bureau of Economic Research.

Sources: Vanguard and U.S. Bureau of Labor Statistics, as of September 25, 2026.

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Net hires rate: The hiring slowdown moves up the age ladder

What we’re seeing: Net hiring among workers ages 25 to 34 has fallen to its lowest level since 2009, and the 35-to-54 cohort turned negative in September. Job-loss rates remain very low, so this is not a story of layoffs but rather of departures going unreplaced. With so few openings being filled, workers who do become unemployed are taking longer to find new roles, extending the duration of unemployment even as the risk of losing a job stays historically contained.

About the data: The Vanguard net hires rate is the unadjusted level of net hires (new enrollments minus separations) divided by the number of all active 401(k) participants in Vanguard-administered plans. We sort employees into annual income groups based on their income from the preceding calendar year, with cut points in real 2025 dollars and adjusted for inflation for prior years. Hiring data by income group lags by two months because we must observe several paychecks before inferring income.

We also sort workers according to their age at the beginning of the calendar year and based on the total number of employees at their respective firms. We report net hires rate as a three-month moving average for these granular cuts.

Net hires rate

Sources: Vanguard and U.S. Bureau of Labor Statistics, as of September 25, 2026.

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Income growth series: Wage growth still strong for incumbent workers

What we’re seeing: The labor market remains bifurcated. While hiring conditions have weakened for job seekers and new entrants, workers who are already employed continue to see income growth that remains supportive of consumer spending.

About the data: The income growth series uses Vanguard 401(k) plan administrative data and captures changes in labor income for a population of continuously employed workers. There are approximately 1.5 million 401(k) participants in the Vanguard sample from 2025. We sort employees into annual income groups based on their income from the preceding calendar year, with cut points in real 2025 dollars and adjusted for inflation for prior years. We classify workers as hourly if at least 45% of their respective paychecks in the preceding calendar year changed by at least $1 relative to the lagged paycheck value. The remaining workers for whom fewer than 45% of their respective paychecks changed by at least $1 are classified as salaried. We also sort workers according to their age at the beginning of the calendar year and based on the total number of employees at their respective firms. We report year-over-year wage growth as a three-month moving average for these granular cuts.

Income growth series

Notes: The income growth series considers employees who made 401(k) contributions in all 12 months of the preceding calendar year. For each employee contribution, we infer the paycheck amount as the contribution amount divided by the contribution rate. For each employee and each month, we compute total income divided by the number of paychecks. We then compute the year-over-year percentage change in income per paycheck for each employee and take the median across employees, excluding monthly observations in which the employee earns less than $200 per paycheck or in which the smallest paycheck is less than 10% of the largest paycheck. The two vertical shaded bars indicate economic recessions, as identified by the National Bureau of Economic Research.

Source: Vanguard, as of September 25, 2026.

Download data here.