ADP Workforce Vitality Index
1st Quarter 2017
ADP Workforce Vitality Report Shows Steady Growth in Wages
The ADP Workforce Vitality Index, which represents the total wages paid to the US private sector workforce, is 113.5 in the first quarter of 2017 (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 3.4% from the previous year.
The U.S. labor market has continued to grow in the first quarter slightly more slowly than in previous quarters but still indicative of a steadily expanding labor market. Weaker wage growth and fewer hours worked caused the modest deceleration. Employment growth remained fairly steady.
Wage growth of individual job holders across industries and regions of the country has increased by 4.3% year over year in the first quarter, about equal to the fourth quarter pace. Those workers who have changed jobs were able to boost their earnings by 3.6%, also unchanged from the previous quarter. While this is lower than the year-over-year gain for those who remain on the job, a large portion of job switchers are part-time workers whose wages do not increase necessarily when they switch jobs.
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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.
Wage growth for workers who have remained with their companies varied across industries during the past four quarters but have not changed appreciably from the prior four quarters. The biggest change over the last year has occurred in natural resources and mining where stabilizing conditions in the industries have again enabled companies to reward their workers with raises. However, wage growth still lags that of others industries, increasing by less than 3% over the past year and thus just keeping up with inflation.
Job holders in leisure/hospitality, information and construction have enjoyed the strongest gains. Workers in leisure/hospitality, the lowest paid industry are benefiting from higher state and local minimum wages in a number of states combined with company policies that are elevating the wages for the lowest paid workers. Not only are holders able to increase their earnings, but switchers are able to garner a 10% increase in wages, a reflection of job opportunities, changes in pay standards and some tightening in the labor market.
Workers in information are the highest paid and are benefiting from strong demand for their coveting skills. However, wage growth has slowed slightly compared to a year ago. Switchers are also less able to boost their wages than a year ago: the average boost was 4.8% in the first quarter, down from 5.4% a year earlier.
An improvement in construction also reflects an increasing scarcity of workers. Wages have improved for construction workers whether they are part-time or full-time or switching between. This is a further testament to the tight conditions in the industry. However, wage switchers can expect only a modest bump-up, less than 2%.
"The information industry showed negative job growth in the first quarter," said Ahu Yildirmaz, Co-Head of the ADP Research Institute®. "As a result, job holders and job switchers in this industry are experiencing high wage growth, as employers seek to retain and attract top talent in this limited pool of workers."
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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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