Americans switching jobs are getting bigger raises than employees staying put, with companies in technology and construction giving the largest pay hikes to those willing to take new positions amid a historically tight labor market.
Workers who switched jobs from one month to the next saw average wage growth of 5.3% in June from a year earlier, near the best pace in almost five years of data and outpacing the 4% gain for all private employees, a fresh high, according to an ADP Research Institute report released Wednesday.
Job switchers in the information industry led the way with 9.7% annual wage growth, followed by an 8.7% jump for construction workers and 8.3% for professional and business services. Leisure and hospitality was the only major industry group with falling wages for switchers.
The private report is the latest sign of a solid labor market as unemployment holds near a half-century low and job openings remain near a record and exceed the total number of jobless.
“The tight labor market is pushing companies to pay more,” Ahu Yildirmaz, co-head of the institute, said in the report. “As labor shortages are apparent in most of the sectors, the businesses are holding on to their skilled workers by increasing their wages.”
Separate data from the Federal Reserve Bank of Atlanta’s Wage Growth Tracker, which also includes public sector jobs, show pay for job switchers climbed 4.5% in June, the second-best pace of the economic expansion and more than the 3.3% annual gain for those who haven’t switched jobs.
ADP’s data also showed employment growth has stagnated at small companies that can’t match the compensation of larger rivals amid heightened demand for workers.
Switchers at companies with 500 to 999 employees got 5.6% raises, the best pace in data back to July 2014, while it was 3.4% for switchers at firms with fewer than 50 workers, down by about half from gains in 2015.
“Most signs point to them finding it increasingly difficult to compete in the tightening labor market,” ADP’s Workforce Vitality Report said. “As outside job opportunities abound, smaller companies are unable to match the pay increases and benefits being offered by larger firms — which has driven turnover rates to be the highest among any segment.”