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Tax Withholding Data Points to Weak US Nov Payrolls

ADMIN || 3rd December 2025

From September through November, federal tax withholding has slowed to year-over-year growth of 3.5%-4.2%, down from about 6% in recent years. That’s a bad signal for November payrolls, according to research from Booth Financial Consulting, based on data from income- and payroll-tax withholding as reported to the US Treasury Department.

The slowdown implies withholding growth is now trending close to the inflation rate. That environment of near-zero real growth suggests a weak payrolls print for November.

In Revelio labs another update, they mention that the US labor market is becoming increasingly bifurcated again and the K-shaped economy shows up clearly in job postings. While demand for high wage jobs remains strong, low wage jobs have seen falling demand over the last two years. Revelio Public Labor Statistics wage data show that while the top quartile of salaries has grown by over 30% since January 2023, the bottom quartile has seen a mere 10% increase. This reverses the post-pandemic trend, when lower wages were growing faster. Jobs with the highest wage growth even at the bottom of the wage distribution are in Sales, Legal and Protective services–all labor-intensive jobs with currently low propensity for automation.

Average AI adoption rates by occupations are negatively correlated with wage growth at the bottom of the wage distribution, and only weakly correlated for top-quartile jobs. This suggests that automation pressures are disproportionately suppressing wage gains in lower-paid roles, which is contrary to narratives that AI is mostly impacting high-earning, white-collar jobs.

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