ADP: US wages grew 3.5% year-over-year
- U.S. wages grew 3.5% over the last year, increasing U.S. average pay by 95 cents to $27.81 an hour, according to ADP's new Workforce Vitality Report. The report showed that American workers earned on average $1.00 more, as of September 2018, than they did last year at this time.
- Driving the earnings growth was strong wage gains for workers in the professional and business services industry (3.5% growth to $35.23 an hour) and the trade industry (3.9% growth to $24.57 an hour), said ADP. Strong wage gains also occurred in the West (4.3% to $29.88 an hour) and large businesses (4.8% to $28.84 an hour). Businesses with fewer than 50 workers, however, saw the slowest growth in wages (2% to $25.56 an hour).
- The report also tracked wage growth for job switchers. Average growth for those who switched to the information industry, which leads in wage level and growth, was 9.8%. Other job changers saw high wage growth in professional and business services (9.4%) and construction (7.5%). "Full employment is upon us. This is evident in the gradual slowdown we've seen in overall job switching for the past year, coupled with an acceleration in wage growth for switchers. As the labor market tightened, employers focused on providing the pay and benefits that would attract and retain skilled talent, making job holders less apt to switch," Ahu Yildirmaz, co-head of the ADP Research Institute, said in a statement.
The economy is prepped for wage increases, thanks to low unemployment and continued growth, but projections for wage increases in 2019 are currently in the 2.8-3.0% range. A Willis Towers Watson (WTW) projection is slightly higher, at 3.1%, but there are few indications that wage growth will change significantly. The ADP study reveals that perhaps wages are slowly beginning the march to growth — but a number of factors may be keeping wages down, regardless, experts previously told HR Dive. An increasingly global workforce, for example, may be encouraging growth without requisite wage increases.
For this reason, employees are opting to job hopping to find higher wages. An earlier ADP report released in July also found that job switchers made noteworthy gains in wages over the past year. But as this report notes, that behavior may finally be slowing down.
Low unemployment is forcing employers to step up recruiting efforts to fill positions, expand their benefits offerings to attract candidates, and discover ways to engage and retain employees. And some employers, like Amazon, raised their minimum wage to $15 an hour to accomplish all three feats — and respond to social or internal pressures. However, employers aren't planning on making any significant wage increases for 2019, as the WTW study found. And wage growth so far doesn't appear to be reversing wage stagnation, which has spanned several decades. The many potential paths for change on this statistic encourage tracking by compensation pros, especially as employers struggle to keep up in a tough talent market.