Employees who changed jobs during the pandemic receive higher wages than those who stay with their employers.
According to research by ADP based on payroll jobs data from 18 million workers, job changers saw their wages rise 5.8% year over year in June, while job seekers saw a 3.1 percent increase. Overall, pay growth slowed from the first quarter but was still 2.3 percent higher in June than a year ago.
“There’s been momentum in wage gains when it comes to job switchers,” Nela Richardson, chief economist at ADP, told Yahoo Money. “We see with the latest second-quarter data a growing comfort in moving within jobs and the industry.”
According to Richardson, firms offer more competitive wages and incentives to attract talent, boosting wage growth among individuals who move professions. The wage increase was higher in some locations and industries than in others.
Job switchers in the Northeast and West saw the most wage rise, at 8% and 7%, respectively, while those in the Midwest saw only a 3% increase in wages over the previous year. Job switchers in resources and mining, information, and finance jobs witnessed the highest gains of 11.8 percent, 9.8 percent, and 7.5 percent, respectively, in terms of industries.
“Some industries were barely tapped by the pandemic like finance, information technology,” Richardson said. “You can expect the competition for talent in those industries is much stronger than others.”
It’s also the only industry in which both job switchers and incumbents saw no improvements. Pay for individuals who stayed at their employment fell by 1.4 percent from a year ago, while wages for those who changed jobs fell by 1.3 percent.
“In those pockets of the economy that were slammed by the pandemic, you’re not seeing that same healthy outlook by employees,” Richardson said. “The story of recovery is not whether you hold your job or you switch jobs, you’re going make less money. That’s not a healthy labor market.”
According to the Labor Department Employment Cost Index, wages and salaries in the leisure and hospitality sectors climbed by 6.1 percent in June compared to a year before. However, Richardson pointed out that, unlike ADP’s analysis, the Bureau of Labor Statistics relies on company questionnaires rather than payroll data.
In April, the rate at which people departed their jobs touched a new high, and it stayed there in May, while the number of job opportunities also hit a new high. According to Richardson, the high rate of job transfers may be here to stay for a while.
“It’ll be with us for a while; it’s going to be part of the recovery process,” she said. “It’s emblematic of an economy that’s increasing in its health and resiliency. That is a good indicator that people feel confident to switch first of all, and secondly that there are returns in doing so.”
Source: Yahoo Finance UK