The pace of wage growth accelerated in the first quarter for both new hires, or “job switchers” and existing employees, or “job holders,” according to the ADP Research Institute's Workforce Vitality Report.

Overall, the average wage for U.S. workers rose 3.8 percent in March from a year ago, to $28.40 an hour, according to the report. In order to attract job switchers, employers raised wages by 5.6 percent on average, to $29.66 an hour – but the boat was also lifted for job holders, who saw average wage growth of 4.8 percent, to $30.82 an hour.

“This marks the strongest growth for job holders since September and is driven by firms' increasing desire to retain their existing workforce as they struggle to find available workers to hire,” the authors write. “In the near term, the most critical trend to watch is the growing disparity with which firms are dealing with more difficult hiring situations.”

The disparity is increasingly falling along company workforce size, as employers with less than 50 workers are starting to get “squeezed out of the job market” by larger employers that can offer higher wages, better benefits and more opportunity for career development, according to the report. Wages rose just 2.5 percent on average for workers at the smallest employers, compared to a 4.9 percent rise for those at the largest employers, with 1,000 or more workers.

“This divide will likely persist as deep-pocketed multinational companies use their resources to attract workers even in a tight labor market,” the authors write. “This trend is even more striking in the employment data as growth at small firms has flat-lined, growing at just 0.1 percent over the last year. At the same time, companies with 500 or more workers are growing at better than 3 percent, an impressive feat at this stage of the business cycle.”

Overall, U.S. employment grew just 1.9 percent from March 2018, “defying expectations for a slowdown given the near-historic length of the current expansion.”

“Job growth is expected to moderate as firms find it increasingly difficult to find and hire qualified workers,” the authors write.

Job switchers in the information industry had the highest average wage growth, at 11.3 percent, to garner the highest average wage level, $44.45 an hour. Job switchers in two other industries experienced high wage growth – wages rose 8.5 percent on average for those getting new jobs in professional and business services sector, and wage growth was 8.6 percent on average for job switchers in the construction sector. Average wage growth for job switchers in the trade industry was less than the average for job holders, 3.9 percent versus 5.1 percent, but overall employment growth for the trade sector – the largest industry analyzed by ADP – was just 0.7 percent.

The fastest growing region was the West, with 4.2 percent overall wage growth on average and 4.2 percent overall employment growth, and for job switchers there, an average wage growth of 7.8 percent. The worst employment growth: the Northeast, with a negative growth rate of 0.3 percent. The lowest wage growth: the South, at 3.6 percent.

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Wages are up as employers try to entice job-hoppers

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