U.S. Wage Growth, for Second Quarter 2019, Accelerated to 4 Percent Over the Year

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According to the ADP Research Institute Workforce Vitality Report (WVR) released on Wednesday July 24, 2019, wages for U.S. workers grew 4.0 percent over the last year, increasing the average wage level by $1.09 to $28.54 an hour. Ahu Yildirmaz, Co-head of the ADP Research Institute said, “The tight labor market is pushing companies to pay more... As labor shortages are apparent in most of the sectors, the businesses are holding on to their skilled workers by increasing their wages."

The growth, accelerating from 3.8 percent to 4.0 percent annual as of June 2019, was driven by strong wage gains for workers in the manufacturing (4.4 percent wage growth, $29.83 hourly wage) and construction (4.4 percent wage growth, $28.65 hourly wage) industries.

From the service sector, information (4.2 percent wage growth, $41.56 hourly wage), trade (4.3 percent wage growth, $25.27 hourly wage), which represents 22 percent of the workforce, and professional and business services (4.1 percent wage growth, $36.45 hourly wage) were the major contributing industries.

So if you are wondering where those big areas of wage growth are, the ADP Research Institute's report indicates that, "job switchers in the information industry continued to lead the way with a wage level of $41.08 and growth of 9.7 percent. Job switchers in professional and business services and construction also realized high wage growth of 8.3 and 8.7 percent, respectively.

On the other hand, in trade areas which constitutes the largest sector, job holders experienced stronger growth in wages than the workers who switched to the industry, 5.2 percent versus 3.8 percent, but lagged in employment growth with only a mere 0.6 percent annually.

The report went on to cite that employment growth has stagnated at small companies and most signs point to them finding it increasingly difficult to compete in the tightening labor market. As outside job opportunities abound, smaller companies are unable to match the pay increases and benefits being offered by larger firms which has driven turnover rates to be the highest among any segment.

Visit the official website to see all the details of the ADP Workforce Vitality Report for the second quarter of 2019, including breakdowns by region, firm size, industry, gender, and age.

Insightful Accountant would like to thank the ADP Research Institute for the content source materials and graphical information provided within this feature.