ADP Workforce Vitality Index
4th Quarter 2015
ADP Workforce Vitality Report Q4 2015 Gives an In-depth Picture of Wage Growth
The ADP Workforce Vitality Index, which represents the total wages paid to the US private sector workforce, is 106.8 in the fourth quarter of 2015 (3Q2013=100, Not Seasonally Adjusted). The Index is driven by a number of metrics including job holders’ wages, job holders’ hours worked, job switchers’ wages, and total employment. The Index grew by 4% from the previous year.
The ADP® Workforce Vitality Report (WVR) has undergone a series of enhancements that enable a deeper look at wage growth. Enhancements to the WVR data include; wages based on tracking the same job holders over time, including full-time and part-time workers, a deeper look at job switchers (those who change jobs) based on whether they switch from a full-time job to another full-time job, from full-time to part-time, from part-time to full-time and from part-time to part-time, and tracking job switchers who move from one region to another and from one industry to another.
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The ADP Workforce Vitality Index analyzes aggregated and anonymous employee-level data. The findings are based on actual data derived from about 340,000 U.S. companies and approximately 22 million private-sector U.S. workers. The privacy and security of the data is safeguarded by multiple layers of protection and no confidential client data is used in the ADP Workforce Vitality Index. The aggregated and anonymous data used in the report means that no information on individual ADP clients or their employees can be identified.
The Workforce Vitality Index, which represents the total wage bill in the U.S. private sector, grew by 4% over the course of 2015. Three components make up the WVI index: employment, hours worked and wages. Employment growth accelerated in the fourth quarter as did the number of hours worked. Average hourly wages for job holders, measured by establishments similarly to the Bureau of Labor Statistics’ average hourly earnings for all private sector workers, weakened slightly quarter to quarter.
Actual wage growth is stronger than is shown in official reports. Overall wage growth as reported by the Bureau of Labor Statistics (BLS) is at 2.4 percent. This number is derived from an “establishment-based” method which includes both those who leave the workforce, as well as those just entering. Since those who leave are typically much more highly paid than those just entering the labor force, these changes could have the effect of bringing the aggregate wage growth down. Furthermore, looking into the mix of workers changing jobs between full time and part time work provides a clearer picture of actual wage growth. Using this measure, wages have increased by 4.1% year over year.
To summarize wage trends across dimensions, the best wage growth is in the West, in information industries, among women, younger workers, those with job tenure of three to five years and among the best paid workers. Among these groups, the youngest workers fared best, but these are also workers who tend to earn the lowest wages so their base pay is lowest. Most of these groups did better a year ago as well. The one exception is the industry category, where natural resources and mining was the best performing industry in 2014 but not in 2015 as the fortunes of the industry changed dramatically.
“Being able to track the same large group of workers who are consistently employed gives us a much different look at wage dynamics,” said Ahu Yildirmaz, VP and head of the ADP Research Institute®. “Wage growth appears to be more robust than generally reported.”
ADP Workforce Vitality Index Trends
About the Report
The ADP Workforce Vitality Index is a comprehensive, quarterly measure of U.S. workforce dynamics that looks at key labor market indicators, such as employment growth, job turnover, wage growth and hours worked. This report yields deeper insights into workforce dynamics and trends than previously available.
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For media inquiries about the ADP Workforce Vitality Index, please call (973) 868-1000 or email Michael Schneider.