What Vanguard data show
Labor market insights
August 04, 2026
9,000 private-sector jobs were added in July 2026
Based on anonymized Vanguard 401(k) retirement plan participant data.
“Hiring activity continues to cool as temporary support from World Cup-related hiring, favorable spring weather, and tax-refund spending fade, leaving July poised to be another weak month for employment. We expect Friday’s nonfarm payrolls report to show a gain of just 9,000 private-sector jobs.”
Adam Schickling, CFA
Vanguard Senior Economist
Hires rate: No clear signs of acceleration
What we’re seeing: The labor market remains defined by a lack of hiring rather than a shortage of jobs, suggesting an emerging skills mismatch that could weigh on labor market momentum.
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.
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 July 31, 2026.
Net hires rate: Hiring has fallen sharply for younger workers
What we’re seeing: A labor market characterized by low hiring creates fewer pathways for younger workers to gain employment. That challenge has intensified recently as hiring activity has continued to weaken.
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.
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 July 31, 2026.
Income growth series: Stable and above its pre-COVID-19 trend
What we’re seeing: Income growth remains supportive of a resilient consumer, with solid gains among those earning $20,000–$50,000 helping to sustain 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 July 31, 2026.
Note: CFA® is a registered trademark owned by CFA Institute.
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