Job-Changers Are Winning Raises Twice As Large As Job-Keepers’: ADP
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- Job-changers enjoyed much stronger pay gains than their peers over the past year, ADP said.
- Quitters’ wages rose 16.1% in the year through August, outpacing job-keepers’ 7.6% gain.
- The discrepancy underscores the historic gap between available workers and labor demand.
The labor market’s quitters are the ones winning the most.
Americans who’ve changed jobs over the past 12 months have seen their pay climb 16.1% in the year through August, ADP said Wednesday in its monthly employment report. That dwarfs the average pay growth for job-stayers, whose pay climbed 7.6% over the same period.
The latest readings — the first pay data shared by ADP since the firm overhauled its monthly employment report — extend a streak of significantly higher pay growth for quitters. Job changers’ wage gains have roughly doubled that of their more stagnant peers through most of the pandemic and even tripled job-keepers’ pay growth in some months.
Pay gains also varied dramatically across industries. Workers in the leisure and hospitality sector — among the hardest hit by lockdowns — have seen wages climb 12.1% over the past year, according to ADP. The trade, transportation, and utilities sector followed with an 8.4% gain in the year through August.
Construction workers, meanwhile, lagged the pack, with workers earning 6.7% more today on average than they did in August 2021.
The report underscores the imbalance still rampant in the US labor market. Despite the economy returning to record-high employment in July, demand for workers remains extraordinarily strong. There were roughly two job openings for every available worker at the end of July as companies scrambled to keep hiring. That gap between worker supply and employer demand has hiked wages sharply higher throughout the recovery for all kinds of workers.
Yet the unusually high number of job openings opened the door for rampant quitting, and it’s those workers who are leading the pack in salary growth. Job-switching tends to be more prevalent when openings are high, as workers feel more confident in their ability to quickly find new work.
The national quit rate backs that up. The measure hit a record 3% in late 2021 as the labor shortage hit its peak and sparked what’s now known as the Great Resignation. The quit rate has since eased to 2.7%. The slowdown suggests the labor market is normalizing, but there’s still a way to go before returning to the pre-pandemic quit rate of about 2.4%.
The pay-growth trend also suggests the best days for workers are also over. Wage growth has broadly moderated since peaking in June, according to ADP.
That matches the signals from overall hiring. The private sector added 132,000 payrolls through August, ADP said, landing below the median forecast of 200,000 new jobs. The print marked a second straight month of slowing job creation and signals the economy is settling into “a more moderate pace of hiring,” Nela Richardson, chief economist at ADP, said in a call with reporters.
To be sure, both job-switchers and job-keepers are winning much larger raises than in the earlier stages of the pandemic. Annual pay increases averaged roughly 2% in early 2021, reflecting weaker demand for workers at the time.
ADP’s data hints the stronger-than-usual wage growth will continue for some time before returning to the pre-pandemic trend. Yet as the Federal Reserve continues to aggressively raise interest rates and consumer demand fades, the blockbuster raises seen through 2022 are likely on their way out.