An analysis of a large amount of workforce data authored by ADP Research Institute finds that wages are going up and directly contributing to a more vital U.S. economy. Those who job-hop are making the greatest gains in wages, far outstripping those who remain in the same job. And small-business employees are experiencing higher wage hikes than those who work for large corporations.
Those are among the takeaways from ADP's Vitality Index, which crunches data drawn from four major workforce components:
- Employees who stay with the same firm (job holders);
- Employees who change jobs (job switchers);
- Employees newly hired by a firm (entrants);
- And those who left the firm either voluntarily or involuntarily (leavers).
The index includes such factors as the wages earned by all groups, hours worked and net employment, and is sorted by region and industry.
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"Since the beginning of 2013, job holders' wages have become the primary contributor to growth. This may mean that employers are becoming more confident about the economy and are focusing on retaining their talent by raising wages," ADP reported in a summary of its results. "The contribution from employment gains has remained steady."
Key findings related to wage growth include:
- Wages grew nationally in Q3 2014, but the fastest growth in real hourly wage has been among the millennials. Generation X and the baby boomers caught up in Q3 2014.
- Employees at small businesses (<50 employees) have higher wage growth than larger companies.
- Wage disparity between men and women is highest when looking at job switchers (men with 5.7 percent wage growth versus women at 4.6 percent), but the data doesn't indicate that the gender gap will disappear any time soon.
- Job switchers are experiencing much faster wage growth (5.3 percent) than job holders (0.8 percent).
- Low wage workers (<$20K) have the highest turnover rate (8.6 percent) of any wage tier; and low-wage job switchers are experiencing the highest rate of wage growth at nearly 10 percent.
- The index grew faster in the South and West compared to the Northeast and Midwest regions; real hourly wage growth and employment growth has driven the growth in the South and West.
- Professional Services, which include technology companies, drove employment growth in the South.
- Real hourly wages grew most quickly in trade industries, which include retail trade.
"The gap between South/West and Midwest/Northeast began to appear in the second half of 2012 and has been growing ever since," ADP reported. "This widening gap can be attributed to faster employment growth, a slower decline in the growth rate of hours-worked and faster growth of real hourly wages in the South and West."
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Dan Cook
Dan Cook is a journalist and communications consultant based in Portland, OR. During his journalism career he has been a reporter and editor for a variety of media companies, including American Lawyer Media, BusinessWeek, Newhouse Newspapers, Knight-Ridder, Time Inc., and Reuters. He specializes in health care and insurance related coverage for BenefitsPRO.
