Using Big Data to Decode Private Sector Wage Growth

TL;DR

This paper leverages large-scale payroll data to analyze detailed wage growth patterns across different workforce segments, providing insights for policymakers and business leaders.

Contribution

It introduces a novel analysis of wage growth using aggregated payroll data, offering detailed insights at the industry, demographic, and employment transition levels.

Findings

Wage growth varies significantly by industry, age, gender, and income level.

Job switchers experience different wage growth patterns compared to job holders.

The data helps predict future labor market trends.

Abstract

The U.S. labor market is dynamic and complex, and understanding wage data across different segments of the workforce is critical to providing policymakers and business leaders with actionable insights. There is no labor index that assesses the labor market performance at such a detailed level as the ADP Research Institute's Workforce Vitality Report (WVR). Drawing on the actual, aggregated and anonymous payroll data of 24 million Americans paid by ADP, the WVR looks at key dynamics and market indicators including wage growth, hours worked and turnover rate. Unlike other data sets, the WVR calculates wage growth of individual workers on a quarter-to-quarter basis, avoiding the deviations caused by various workplace occurrences, like when new workers are hired and older ones retire. In this paper, Dr. Ahu Yildirmaz, head of the ADP Research Institute, drills down into wage growth by industry, age, gender and income level, as well as for both job holders and job switchers. Using WVR data, Ahu walks through those factors contributing to overall shifts in wage growth, the future of the labor market and what this data means for today's U.S. workforce.