Millions of Americans opted to retire early during the COVID-19 pandemic in what has been termed the COVID Retirement Boom, and that drain on workforce participation could be playing a role in wage increases across the country.
According to payroll processing firm ADP Inc., from 2019 to 2021, and in contrast to years prior, low-end salaries increased most rapidly in cities with the lowest pay levels. Because it is more viable to remain out of the workforce in lower-cost cities, employers in those markets are struggling to hire and are offering increased pay to attract workers, the company's "The Geography of Wage Growth" report theorizes.
Recommended For You
As the economy opened back up following the worst of the pandemic, employers were able to bring back workers they previously employed or hire motivated workers. "But when that low-hanging fruit was picked, employers were left with a pool of candidates who had grown increasingly acclimated to living outside of the labor force. They had compelling reasons not to return to work, such as health concerns, school-aged children studying from home, or early retirement. In fact the latter may have been especially important, as the population in the nation's low-income cities tends to be older than elsewhere."
Many of those people had adapted financially, subsisting on retirement income or a single spouse's paycheck, tapping unemployment benefits or other government relief, or doing part-time or informal work, the report says.
This new phenomenon of greater low-end salary growth in low-income cities than elsewhere, is almost surely rooted in the labor market extremes wrought by the pandemic, the report says, noting identical measurements taken from 2017 to 2019 did not show the same type of shift. Whether this phenomenon is a short-term blip or a long-term trend will require further study over time, ADP says.
ADP Research Institute tracked wage quantiles for private-sector workers and a variety of sub-groups at the metropolitan level using gross wages of recorded in ADP payroll data.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
