Wage growth starts to slow in Q3, says ADP

The U.S. labor market and wage growth are showing some signs of a slowdown, according to a new report by payroll giant ADP.

The ADP Workforce Vitality Report for the third quarter of the year found that wages for U.S. workers grew 3.2 percent over the last year, increasing the average wage level by $0.90 to $28.71 an hour. However, workers are not seeing as much of a salary boost as they did earlier this year or last year.

“The labor market has shown signs of a slowdown,” said Ahu Yildirmaz, co-head of the ADP Research Institute, in a statement. “After accelerating at the start of 2019, annual employment growth has leveled off to a modest 1.7 percent in September. While job switchers continue to enjoy wage growth of 5.1 percent, employers appear to have reached the limit of what they are willing to pay workers to entice them to switch jobs.”

Patrick T. Fallon/Bloomberg

Job switchers received an average wage increase of 5.1 percent when they moved to a new employer. However, wage growth for job switchers differed significantly across industries (ranging between -3 percent to 10 percent). Construction, finance, information technology and some parts of the professional services industry are still outperforming the overall average.

Workers in the Midwest outpaced other parts of the country with 3.9 percent wage growth, but the hourly wage rate was the lowest at $26.76. This region of the country also saw the lowest employment growth at 0.9 percent. Job switchers fared best in the West, seeing wage growth of 6.6 percent. Employees in the South had the lowest wage growth at 2.9 percent. By company size, workers at large companies saw the highest wage growth rate at 4.1 percent, with employment growth at 3.2 percent.