ADP Workforce Vitality Index
1st Quarter 2016
ADP Workforce Vitality Report Shows
The ADP Workforce Vitality Index, which represents the total wages paid to the US private sector workforce, is 106.7 in the first quarter of 2016 (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 3.2% from the previous year.
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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 3.2% year over year down from 3.4% during the prior four quarters. Three components make up the WVI index: employment, hours worked and wages. The first quarter gain was driven by accelerating wage growth; employment grew more slowly and hours remained steady.
True wage growth for labor market participants is measured by tracking individual workers who have remained in the same job over the past year. As with the establishment method, earnings growth has accelerated – to 4.7% year over year, from 4.1% in the fourth quarter of 2015 and from 3.8% year over year in the first quarter of 2015.
To summarize wage trends across dimensions, the best wage growth is in the West, in information industry, among women, younger workers, those with 3 to 5 years job tenure and those employed at the largest companies. Across dimensions wage growth has accelerated. The one exception is the industry category, where wages in natural resources and mining decelerated sharply as the industry has struggled with low commodity prices, particularly oil prices.
“Year-over-year wage growth grew substantially for job holders in Q1 2016, rising from 4.1 percent in Q4 2015 to the current 4.7 percent,” said Ahu Yildirmaz, VP and head of the ADP Research Institute®. “This may be a signal that continued employment growth is leading to a talent shortage, in turn motivating employers to increase wages to retain experienced workers.”
ADP Workforce Vitality Report Shows Accelerated Growth in Wages
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.