Payroll Services NAICS 541214

Jul 31, 2025 - US Job Losses By July Already Surpass Last Year's Total

• About 806,000 American jobs have been lost so far in 2025 (more than all the job losses from 2024), with the biggest culprits being the Department of Government Efficiency (DOGE), tariffs, and AI adoption. A report from career services company Challenger, Gray & Christmas found private and public employers slashed 62,000 jobs in July, a 30% jump from the month prior and a massive 140% boost year over year. The federal government cut the most jobs of any sector this year (about 292,000) this year, followed by technology (89,000 cuts), and retail (80,000). Government spending cuts not only affect federal workers, but DOGE cuts to grants and research spills into the non-profit sector, which lost 17,800 roles as a result, a whopping 413% increase from 2024. AI is the primary contributor to technology job losses, with workforce reductions in the sector up 36% from last year.
• Payroll services industry employment steadily increased for most of 2024 and in the early part of 2025, before flattening out by mid-year. According to the US Bureau of Labor Statistics (BLS), employment was up 1.2% in May 2025 from the previous year. Average wages for nonsupervisory employees have been relatively flat so far in 2025 after rising sharply throughout the previous year, with the latest BLS reports showing an increase of 3.8% in May year over year to an average wage of $34.37 per hour. The increases reflect high-demand in a rapidly transforming and technologically complex industry. More companies are outsourcing their payroll services as tax regulations become too volatile; an increase in gig workers, contractors, and remote workers present unique payroll challenges; and technology advances from increased reliance on cloud computing and AI all contribute to employment and wage growth.

• The line between payroll services and insurance companies is growing fuzzy and the pending $4.1 billion merger between payroll service giants Paychex and Paycor further solidifies the industry trend. At the corporate level, the merger will broaden Paychex’s customer base and allow it to utilize Paycor’s AI technology to become a “one-stop shop” for all corporate HR needs - including selling insurance. Previously, payroll companies had mainly left the selling of insurance (mostly worker’s compensation coverage) to its partner agents, but payroll firms are increasingly removing the middle man and selling policies directly. The announced merger - coming on the heels of ADP’s $2.1 billion purchase of WorkForce Software in 2024 - is cause for concern among insurance industry agents who fear being squeezed out of a lucrative customer base.
• Wage reductions that swept through the white-collar workforce in 2023 are taking hold in several blue-collar sectors, according to The Wall Street Journal. During the pandemic, when employers were starving for workers, recruits were lured by generous pay. However, the power dynamic has shifted as the labor market has softened, and many employers are offering lower wages. Among 20,000 different job titles listed on ZipRecruiter, so far in 2024, average posted pay has dropped in retail, agriculture, manufacturing, food, and transportation and warehousing. Some of the biggest declines in advertised pay offerings were in retail (down nearly 60%), agriculture (-24.5%), and manufacturing (-17.3%). Some white-collar positions are also seeing new-hire wages drop. Wages for new hires in finance have fallen 9.2% in the past year, professional services wages are off 2.4%, and insurance pay has declined 1.6%, according to payroll and benefits software firm Gusto.