ADP Research Institute®

ADP Workforce Vitality Index
2nd Quarter 2017

ADP Workforce Vitality Report Shows Job-holders are faring a better wage increase than Job-switchers

The ADP Workforce Vitality Index, which represents the total wages paid to the US private sector workforce, is 115.0 in the second 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 4.3% from the previous year. The U.S. labor market has continued to grow in the second quarter at more accelerated pace than previous quarters indicative of a steadily expanding labor market. Employment growth remains steady while wage growth has accelerated slightly over the past year. Wage growth should continue to improve as the labor market tightens further. Wage growth of individual job holders across industries and regions has increased by 4.4% year over year in the second quarter, representing modest improvement over previous readings. Those workers who have changed jobs saw their earnings increase by 3.4%, the lowest level of growth in several years. A large portion of job switchers are part-time workers whose wages do not increase necessarily when they switch jobs.


ADP Workforce Vitality Index

115.0 4.3%
Change from 2Q 2016

Index Indicators (Yearly growth)

Total Employment Growth 1.9%

Job Turnover Ratio 27.0%

Change in the Hours Worked -0.6%

Wage Growth for Workers Who Stayed in Jobs 4.4%

Wage Growth for Workers Who Changed Jobs 3.4%


SIZE
Small
< 50 Employees
122.6
Midsized
50-499 Employees
111.8
Large
500-999 Employees
117.5
Enterprise
1000+ Employees
113.3

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REGIONS AND KEY STATES
Midwest
113.2
Illinois
109.1
Ohio
111.5
Michigan
115.4
Northeast
111.2
New Jersey
109.6
New York
112.2
Pennsylvania
106.7
South
115.7
Florida
120.5
Texas
115.5
West
118.8
California
117.9
Washington
125.5
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INDUSTRY
Construction
127.5
Manufacturing
109.1
Trade & Transportation
113.1
Finance
118.4

Professional Services
114.8
Education & Healthcare
116.2
Leisure & Hospitality
122.1
Information
113.6

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GENDER
Male
113.6
Female
117.2

AGE GROUP
16-24 Years Old
120.8
35-54 Years Old
110.0


25-34 Years Old
116.2
55+ Years Old
124.9


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FULL-TIME / PART-TIME
< 35 Hours
115.9
≥ 35 Hours
108.3

TENURE
1-3 Years
118.9
3-5 Years
136.4
5-10 Years
97.1
10+ Years
114.1




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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.



Wage growth for workers who have remained with their companies varies little across industries over the past year with wages increasing by 4 to 5%. Job holder wage growth has also not changed appreciably from the prior four quarters, with modest gains generally being made. Workforce dynamics vary across regions. The region that remains the strongest is the West, which despite exposure to commodities and the high dollar, benefits from strong demographics, booming tech, tourism and international trade, and a recovering housing market. The workforce vitality index for the West has advanced by 5.2% over the past year. The West also leads other regions in terms of wage growth of holders, and growth has edged higher over the past year. Employment growth remains solid at 2.3% and job switchers are benefiting from a modest bump in pay. The Northeast is doing surprisingly well also given its exposure to the weak economy in Europe. Wage growth of 4.3% for job holders has been stable over the past year. The respectable pace may be due to the higher share of educated workers who are in high demand in the region’s knowledge based industries including education, finance, tech and professional services. The region’s weak demographics render it more difficult for employers to find suitable workers, driving higher wages of both holders and switchers. Employment growth is lagging behind the national average. Wage growth for job holders has been stable in the Midwest, but job switchers are faring less well and employment growth has been sluggish. The region has high exposure to the struggling global economy as well as high exposure to commodities. While oil prices have begun to rebound, crop prices have not. Yet, wage growth, at 4.4%, slightly outpaces that in the Northeast. Finally, the South, which has a high share of low-wage jobs and also high exposure to commodities, is experiencing slightly more modest wage gains for holders, although gains have accelerated in recent quarters. Similarly, at 2.9%, switchers in the South can expect a smaller raise than in other parts of the country. Employment trends remain in the lead along with the West.

“In the second quarter, job holders experienced a slight acceleration in wage growth on a yearly basis across most industries,” said Ahu Yildirmaz, co-head of the ADP Research Institute®. “This could be a result of increased efforts by employers to retain their employees as the labor market continues to tighten and skilled talent becomes scarce.”





ADP Workforce Vitality Report Shows Job-holders are faring a better wage increase than Job-switchers


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.