ADP Research Institute®

ADP Workforce Vitality Index
2nd Quarter 2016

ADP Workforce Vitality Report Shows Continued Growth in Wages

The ADP Workforce Vitality Index, which represents the total wages paid to the US private sector workforce, is 109.6 in the second 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 2.7% from the previous year. The U.S. labor market has continued to improve in the second quarter of 2016 but is less buoyant than at the end of 2015. Wage growth still has room for improvement. Labor market slack and the very lengthy recovery combined with persistent uncertainty about the strength of the economy have tempered wage gains. In addition, there are other structural reasons for the modest wage growth including the decline in union bargaining power, the use of non-wage perks or one-time bonuses in lieu of locked-in pay increases.


ADP Workforce Vitality Index

109.6 2.7%
Change from 2Q 2015

Index Indicators (Yearly growth)

Total Employment Growth 2.0%

Job Turnover Ratio 25.5%

Change in the Hours Worked 1.3%

Wage Growth for Workers Who Stayed in Jobs 3.1%

Wage Growth for Workers Who Changed Jobs 1.3%


SIZE
Small
< 50 Employees
117.3
Midsized
50-499 Employees
107.0
Large
500-999 Employees
107.8
Enterprise
1000+ Employees
108.1

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REGIONS AND KEY STATES
Midwest
107.8
Illinois
105.0
Ohio
106.2
Michigan
109.9
Northeast
108.0
New Jersey
107.2
New York
109.0
Pennsylvania
104.9
South
109.8
Florida
113.3
Texas
110.5
West
112.2
California
112.7
Washington
115.5
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INDUSTRY
Construction
121.6
Manufacturing
107.3
Trade & Transportation
107.8
Finance
112.3

Professional Services
107.9
Education & Healthcare
111.3
Leisure & Hospitality
115.1
Information
109.6

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GENDER
Male
108.5
Female
111.4

AGE GROUP
16-24 Years Old
112.1
35-54 Years Old
106.2


25-34 Years Old
110.2
55+ Years Old
116.8


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FULL-TIME / PART-TIME
< 35 Hours
105.4
≥ 35 Hours
110.2

TENURE
1-3 Years
114.0
3-5 Years
127.2
5-10 Years
93.9
10+ Years
107.5




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Note: 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 of U.S. private-sector workers, grew by 2.7% year over year, down from 3.3% during the prior four quarters. The second quarter gain was driven by growth in hours worked and employment. Wage growth on a year ago basis was moderate largely because of an unfavorable year-ago comparison; trend growth over the past two years still shows acceleration. Wage growth for workers who have remained with their companies varied across industries during the past four quarters. Wage growth slowed in every industry but remained strong in most, with the exception of natural resources and mining. The information industry continues to lead the way in terms of wage growth at 7.5%, down from 9.3% in the previous quarter. Other industries that have maintained strong growth in wages include leisure/hospitality, manufacturing, construction, and finance. In the case of leisure/hospitality, the implementation of higher minimum wages in states and municipalities may have resulted in the continuing growth in wages in the second quarter. The industry is very exposed to minimum wages laws because they have the highest share of part-time, low-paid workers. Leisure/hospitality wage growth dropped only slightly to 5.6% over the past four quarters. To summarize wage trends across dimensions, the best wage growth is in the West, in the information industry, among women, younger workers, those with moderate job tenure and those employed at the medium-sized companies. These winners remain consistent from quarter to quarter. Across dimensions wages continue to grow although generally at lower rates. The one exception is the industry category, where wage growth in natural resources and mining turned negative over the year as the industry has struggled with low commodity prices, particularly oil prices.

"The positive trend in wage growth over the past few quarters suggests that wages may finally reflect the tightening labor market,” said Ahu Yildirmaz, VP and head of the ADP Research Institute®. “Employers are continuing to provide raises to their workers for retention."





ADP Workforce Vitality Report Shows Continued 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.

Workforce Index Report FAQs (PDF) | Glossary (PDF)

Report Methodology (Executive Summary)

Calendar of Report Releases

For media inquiries about the ADP Workforce Vitality Index, please call (973) 868-1000 or email Michael Schneider.