Wage Growth Accelerated in Q1

Wage growth for full-time workers accelerated in the first quarter of the year, according to a new report from payroll giant ADP.

The ADP Workforce Vitality Report found acceleration in wage growth in nearly all industries and all age groups, thanks to a tightening labor market.

Wage growth among workers who held onto their jobs seemed to grow at a faster pace than among those who switched jobs. Job holders increased their growth by half a percentage point from the fourth quarter of last year, while job switchers' growth rate slowed slightly, although they still maintained higher wage growth than holders.

“Year-over-year wages grew substantially for job holders in Q1 2016, rising from 4.1 percent in Q4 2015 to the current 4.6 percent," said ADP vice president Ahu Yildirmaz, who heads the ADP Research Institute. “This may be a signal that continued employment growth is leading to a smaller pool of available talent, in turn motivating employers to increase wages to retain experienced workers."

Wage growth for full-time job holders accelerated in every industry, except for natural resources and mining. The highest acceleration occurred in the information industry, where the growth increased by 0.8 percentage points from last quarter on a year-over-year basis. Other industries that have experienced strong acceleration in wages include leisure and hospitality, finance and trade.

In the case of leisure and hospitality and trade, the implementation of higher minimum wages in some states and municipalities may have affected the first-quarter wage growth. Wage growth for leisure and hospitality accelerated to 5.7 percent over the past four quarters, while wage growth in the trade sector accelerated to 4.3 percent.

TABLE 1: Wage Growth for Full Time Job Holders

TABLE 2: Wage Growth for Job Switchers

TABLE 3: Q1 2016 Wage Growth for Job Holders and Switchers by Age

TABLE 4: Who Fared the Best Wage Growth Among Job Holders