Young Workers Finally Got a Payday
Young workers are among the biggest gainers in ADP's latest Workforce Vitality Report.
The most recent Workforce Vitality Report (WVR) shows remarkable gains among new entrants to the workforce during the first quarter of 2018.
The Q1 report shows that wages are growing across most demographics. In particular, young workers trying to break into the employment space have done extremely well, almost doubling the overall average wage increase over the previous year. The overall level of wage growth in Q1 2018 was 2.9 percent.
The report also shows that the turnover rate has increased, which is to be expected in a market with low unemployment and rising wages across the board.
Young Workers Get a Payday, But They're Not Alone
Workers joining the workforce at age 24 or younger are being paid 5.2 percent more than they were a year ago, which makes them the report's most improved group and far more successful than they were last year, when wage growth in the same group was just 2.5 percent.
New entrants to the workforce bring advanced new skills that older workers either don't have or learn slowly. But the bigger reason for their success is likely America's current, historically low level of unemployment. When employers are hard-pressed to find new talents, workers with brand new skill sets are highly desirable. New, young workers are often willing to work for far less than experienced professionals, making wage growth within this depressed range much easier to achieve. New workers are also untainted by firings and other potential red flags.
There is likely little to be done to adjust this upward trend for new, younger workers, since their wages have been out of step with the larger trends for some time. As the Washington Post points out, it does nobody any favors when wage deficits build up to the point that they cause lifelong problems — not to mention chronically stressed or distracted workers.
For Those Looking for a new job, Industry is All-Important
Of any industry, the Information Services saw the best performance in wages, with an overall wage growth of 5.6 percent, but it was Resources and Mining that was the most improved over Q1 2017. Owing mostly to its poor performance last year, the resources industry saw a 1.7 percent gain — 4 percent greater than last year's figure.
Overall, workers who stayed in their jobs for at least the last year showed fairly steady wage performance across industries, while job-switchers saw wildly different levels of wage growth across the labor market. Job-switchers to the Leisure and Hospitality industry as usual saw a reduction in their wages by 4.1 percent as that is lowest paying industry, while switchers in the Information Services gained a whopping 8.3 percent.
New workforce entrants saw similar volatility, but lower differences in actual wages, though that's mostly because new entrants tend to make far less than other workers across the board. Leisure and Hospitality once again brings up the rear with a $9.41 average hourly wage, while the Information Services led the way with $16.79. New entrants in Finance saw a respectable income of $14.19 per hour, but since this was already a successful industry, it represented one of the smallest year-over-year increases, at just 0.7 percent.
The West Leads the US in Wage Growth
The Workforce Vitality Report shows that workers in the western region of the United States saw an overall wage growth of 3.5 percent. But it was the job-switchers and new entrants who really reaped the rewards of living in this lucrative region, bringing in 8.2 percent and 7.4 percent more than last year, respectively. The West showed the strongest wage numbers for every worker type, however. The South in general, performed the weakest.
New workers gained 5.1 percent wages in the Northeast, 4.9 percent in the Midwest and 3.8 percent in the South. The Midwest generally outperformed the South, reflected in the overall wage growth levels of 2.8 percent in the Midwest and 2.5 percent in the South, but the Midwest was also the single worst place in America from which to attempt to switch jobs. Job-switchers there saw an increase of just 1.9 percent, 1.6 percentage points lower than last year's figure.
After a sustained period of extremely low unemployment, wages are generally expected to rise, as reported by CNBC. If anything, the current upward trend has taken a surprisingly long time to arrive, and it probably isn't going to taper off for a while. How much longer is anyone's guess, but in Q1 the labor market finally began to show the sort of across-the-board salary gains that economists have been predicting for some time.
