Study: Wage Growth Outpaces BLS-Reported Numbers

By Stephen Miller, CEBS Jan 29, 2016
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Overall wage growth in the U.S. remained fairly consistent throughout last year, with a 2.4 percent year-over-year increase marked in the fourth quarter (Q4), according to the U.S. Bureau of Labor Statistics (BLS).

The BLS wage growth measurement included part-time and full-time workers, as well as those who left the workforce and those who were just entering. “Since those who leave are typically much more highly paid than those entering, this type of churn could have the effect of bringing aggregate wage growth down,” said Ahu Yildirmaz, vice president and head of the ADP Research Institute, an affiliate of payroll services firm ADP.

ADP’s Q4 Workforce Vitality Report, which tracks wage changes separately for full-time job holders and for job switchers, showed that wage growth was actually higher than the growth calculated using the BLS’s method, said Yildirmaz. “Following only full-time workers, wage growth was 4.1 percent for job holders and 4.7 percent for job switchers.”

Wage growth for individual workers varied extensively across industries during the past year. The table below shows wage growth for full-time job holders and job switchers by industry.

Q4 2015 Wage Growth by Industry

Year-Over-Year Wage Growth

Full-Time

Job Holders

Job Switchers

ALL

4.1%

4.7%

Manufacturing

4.5%

2.0%

Construction

4.5%

3.4%

Resources and mining

0.3%

-6.4%

Finance and real estate

4.3%

6.6%

Information services

5.7%

6.4%

Professional and business services

4.4%

6.3%

Leisure and hospitality

3.9%

8.2%

Education and health services

3.7%

7.9%

Trade, transportation and utilities

3.6%

4.6%

Source: ADP Workforce Vitality Report



The highest wage growth for job holders by region was in the West, ADP found, while the South had the lowest wage growth.

The Northeast was the best place to change jobs, with the highest wage growth for job switchers. “This could be due to the preponderance of highly paid financial and tech jobs in the region,” said Yildirmaz.

Q4 2015 Wage Growth by Region

Year-Over-Year Wage Growth

Full-Time

Job Holders

Job Switchers

ALL

4.1%

4.7%

Midwest

4.1%

5.3%

Northeast

4.1%

5.8%

South

3.8%

3.9%

West

4.5%

5.0%

Source:ADP Workforce Vitality Report



As in the past, wage growth was most robust on a percentage basis for workers under age 35, in large part because of their lower base wage. Workers ages 55 and older showed negligible wage growth when they switched jobs. “This is possibly due to difficulty for older workers to find new jobs and they settle for marginal increases, or even pay cuts,” said Yildirmaz.

Q4 2015 Wage Growth by Age

Year-Over-Year Wage Growth

Full-Time

Job Holders

Job Switchers

ALL

4.1%

4.7%

25 and younger

8.7%

11.9%

26 - 34

6.8%

8.3%

35 - 54

3.8%

3.4%

55 and older

2.1%

0.2%

Source:ADP Workforce Vitality Report



Similarly, by income group, those with the lowest wage base showed the greatest percentage growth in pay.

Q4 2015 Wage Growth by Income

Year-Over-Year Wage Growth

Full-Time

Job Holders

Job Switchers

ALL

4.1%

4.7%

$20,000 or less

13.8%

59.6%

$20,001 to 50,000

6.1%

11.9%

$50,001 to 75,000

4.9%

6.7%

$75,001 or more

3.6%

3.4%

Source:ADP Workforce Vitality Report



Those who changed from part-time to full-time work experienced a decrease in their average hourly earnings in most industries, ADP found. “This implies workers are willing to accept lower average hourly wages if full-time work comes with benefits and higher total income,” said Yildirmaz.

Stephen Miller, CEBS, is an online editor/manager for SHRM. Follow me on Twitter.

Related SHRM Article:

Higher Pay Ahead? Wage Growth Perks Up, SHRM Online Compensation, January 2016

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