Third quarter U.S. wage growth increased 3.3 percent, in line with growth in the months leading up to the pandemic; however, wage growth for job switchers increased 6.6 percent since September 2020 according to the ADP Research Institute^® Workforce Vitality Report (WVR) released today. Employment growth increased by 4.1 percent in September 2021.

"According to ADP data, U.S. wage growth has begun to align with pre-pandemic levels, reporting 3.3 percent increase for all employees. Though overall wage growth is normalizing back to pre-pandemic levels, the uptick in hiring demand is still boosting pay for job switchers, whose wages grew 6.6 percent from last year," said Nela Richardson, chief economist, ADP. "As the economy continues to regain lost footing due to the pandemic, we are seeing pockets of unevenness in wage growth across the workforce as employers continue to offer competitive compensation, as well as in sectors such as leisure and hospitality which reported the greatest employment gains. Further, females switched jobs at a higher rate than men and outpaced their male counterparts in wage growth and job switching wage growth, though from a lower wage level."

Employment growth year-over-year increased 4.1 percent. Wage growth was positive across almost all sectors with trade, professional services and construction leading the way; information reported no net change in employment. Leisure and hospitality experienced the biggest gain with 15 percent employment growth, as the sector slowly recovers from the hefty layoffs due to the pandemic. 

Table 1: Wage and Employment Growth by Industry – September 2021

Across the U.S., most regions experienced similar wage growth near the national average of 3.3 percent, with the exception of the Mid-west which came in below average at 1.7 percent. Job switchers saw improved wage growth at 6.6 percent from the previous quarter as firms compete for workers. By firm size, employees from mid to large size firms saw higher wage growth than those employed at small businesses.

Table 2: Wage and Employment Growth by Region and Firm Size – September 2021

Job switching increased from the previous quarter from 5.8 percent to 6.6 percent. Among the genders, females switched at a higher rate than males at 22.4 percent compared to 20.6 percent, respectively and also saw slightly higher wage growth. Although female job switchers are realizing larger gains than their male counterparts, some of this gap is due to the differing industry composition of jobs recovered for men and women.

Table 3: Wage and Switching Rate by Industry and Gender – September 2021

Across all age groups, employment growth was the most significant for employees age 24 or less and workers over the age of 55, possibly reflecting those rejoining the workforce post-pandemic. Female wage growth has surged to 4.5 percent, in part because they are coming from a lower wage, while the increase for men has been much more tepid, only at 2.4 percent in September 2021.

Table 3: Wages by Gender and Age – September 2021