Payroll giant ADP has released a new report indicating that wage growth has been accelerating since the beginning of last year.
The company’s new quarterly Workforce Vitality Index The Index, which is part of the ADP Workforce Vitality Report, developed by the ADP Research Institute in collaboration with Moody’s Analytics, includes metrics such as job holders’ wages and hours worked, job switchers’ wages, and total employment. The Index was 110.6 in the third quarter of 2014, growing 0.77 percent from the previous quarter.
The Index considers four types of workers in the labor market: those who stay with the same firm (job holders), those who change jobs (job switchers), those who are newly hired by a firm (entrants), and those who left the firm either voluntarily or involuntarily (leavers). Real hourly wages, hours worked for job holders and net employment have been the main contributors for the growth of the Index, and 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 noted.
“The growth we are showing in the ADP Workforce Vitality Index is being primarily driven by an increase in real hourly wage rates,” said Ahu Yildirmaz, vice president and head of the ADP Research Institute, in a statement. “This is a good sign that may lead to increased consumer spending and a boost for the economy.”
The ADP Workforce Vitality 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. Real hourly wages grew most quickly in trade industries, which include retail trade. Professional services, which include technology companies, drove employment growth in the South.
While the ADP Workforce Vitality Index has trended higher in all four regions over the past three years, the gap between the South & West and the Midwest & Northeast began to appear in the second half of 2012 and has been growing ever since. 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.
For more information, visit
Separately, ADP also released its ADP Regional Employment Report for the month of September on Wednesday. The report, also developed by the ADP Research Institute in collaboration with Moody’s, found that the Northeast region was the only one to show a decrease in the number of jobs added, compared to August.
“The Northeast continues to lag behind the other regions in employment growth, while the West showed the biggest increase in both jobs added and growth rate,” said Yildirmaz.
For more information, visit
[IMGCAP(1)]
[IMGCAP(2)]
