New jobs report shows salary increases are nearly on par with inflation
Annual pay rose by 7.6% in the period leading up to August 2022, compared to an average increase of 2% in early 2021.
A new report from ADP suggests that employers are continuing to add jobs – though fewer new employees were added to the payroll in August compared to July. According to the ADP National Employment Report, while there were 270,000 new jobs added to the economy in July, only 132,000 jobs were added in August, representing a reduction in growth of over 50%.
The new jobs push total employment in the private sector to 121,571,000, exceeding pre-pandemic levels for the first time. Still, not all industries have seen equal job gains. For instance, while the leisure and hospitality field added 96,000 new jobs, there was actually a reduction of around 20,000 jobs within the financial services sector.
“Our data suggests a recent shift toward a more conservative pace of hiring, possibly as companies try to decipher the economy’s conflicting signals,” says Nela Richardson, ADP’s Chief Economist. “We could be at an inflection point, from super-charged job gains to something more normal.”
Another report by ADP looked at annual pay increases, finding that salaries were increasing rapidly, nearly on par with inflation. Annual pay rose by 7.6% in the period leading up to August 2022, compared to an average increase of 2% in early 2021. Employees working for larger firms saw bigger increases: companies with more than 500 employees raised salaries by 8.3% on average, while companies with 1 to 19 employees only saw a 5.4% average bump in pay.
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Again, different industries saw different increases, per the report. The largest leisure and hospitality sector and trade, transportation, and utilities experienced the largest boost in average salary, at 12.1% and 8.4% respectively. On the other end of the spectrum, pay in construction only increased by 6.7%.
But the biggest raises went to job hoppers. While loyal employees got salary gains of 7.6%, people who changed jobs got an average increase in pay of 16.1%.