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Uncertainties about the medium-term effects of import tariffs and concerns among business leaders about the direction of the economy, have flattened job creation rates since May. Now, new research indicates that the anemic labor market has led to the lowest level of employee income growth in nearly a decade. It’s having an outsized effect on people aged 25 to 29 who are are comparatively new to the workforce and often still struggling to stand on their own two feet financially. Those sobering findings were the primary points of a recent analysis by economists at JPMorgan Chase. The bank calculated that as of September, the median income of workers aged 25 to 54 years had increased by only 5 percent in 2025 — 2 percent once adjusted for inflation. That marked the weakest rate of growth since the “early 2010s, when the unemployment rate was still elevated from the Great Recession,” the report said. In addition, it noted “real purchasing power gains are at a relatively low level because of the higher pace of consumer price increases.” While that’s bad news for an enormous portion of the U.S. workforce, the trend has been particularly damaging to younger workers. To be sure, the growth of median income during the first nine months of 2025 for people aged 25 to 29 was 4 percent higher than employees in their 40s. However, that level is considerably lower than the average 6 percent to 7 percent wage hikes that young people typically benefit from early in their careers. Featured Video An Inc.com Featured Presentation “Early in most individuals’ working lives, people tend to have lower levels of income but relatively high growth,” the JPMorgan Chase analysts wrote. “However, income advancement for this group — those aged 25–29 in our sample — has slowed down by more than (for) older individuals over the past few years.” That flagging income growth has accentuated amid currently flat hiring rates. While companies have largely avoided mass layoffs amid economic uncertainty, most also stopped hiring — except in some cases to replace departing workers. The resulting tight labor market has inspired the spread of “job hugging.” The trend involved employees who might have otherwise been eager to find new positions that offer better opportunities and pay instead cling for dear life to the work they have. That‘s led to a degree of staffing stability that has permitted many employers to hold firm on salary increases, and to lower wages for any new recruits they do take on. While that has contributed to the smaller income growth of employees generally, it’s hitting younger people hardest. The reason: They rely on jumping between positions and employers early in their careers to keep increasing their relatively lower levels of remuneration. “Weakening labor market dynamism weighs especially on young workers, who rely to a greater extent on job switching to climb the career ladder,” the report said. The study also highlighted why the challenges younger workers now face may well mean trouble for the nation’s wider economy and employment outlook. On the one hand, it said a dimming job and income outlook for Gen Zers may be a harbinger of what everyone else could soon face. “Academic and policy work focusing on the unemployment rate of different demographic groups have found that young people often exhibit excess sensitivity to the overall state of the labor market,” the report warned. “Consistent with these findings, the relative slowdown in growth for the younger segment in the population is a potential function of the slowdown in broader labor market dynamism — seen in lower gross hirings and quit rates.” Meanwhile, just as no person is an island unto themselves, workers of older generations may not be immune to the knock-on effects of the labor market’s youngest cohort seeing its lower pay scales anchored down in a low-growth economy. That’s particularly true since early career income gains traditionally become the financial foundation upon which young people build their places in the wider economy. “People in their twenties and early thirties are less likely to own homes than older individuals, meaning the rise in housing costs since 2022 has hit this group particularly hard,” the study said. “And while they are getting an earlier start to investing, they haven’t benefited as much from the past decade of strong returns. Without stronger income gains, they may need to wait even longer for their budgets to catch up to their financial goals.” That leaves employers facing a dilemma of their own. Some may decide to increase pay for their younger employees until the job market frees up again, lifting pay scales with it. Those who do may reason that providing more disposable income to employees habitually translates into higher sales for businesses, and stronger economic growth all around. But to do that, company owners would have to temporarily ignore one of their biggest financial concerns: limiting constatnly increasing labor costs that weigh heavily on their bottom lines.
