The lack of wage growth throughout this economic expansion has puzzled many experts. The U.S. economy hit full employment in March 2017 and the economy has seen the longest job growth stretch on record. It turns out it took a year and a half for a shift to happen.
Payroll processor ADP reported wage growth hit 3.8% in April after nearly a decade of minimal growth. Individuals that switched jobs saw a 5.6% increase in their wage, an increase 1.5% higher than the last year.
“As employment growth slows and wages accelerate for both job holders and job switchers, all signs point to a scarcity of skilled talent in the labor market,” said Ahu Yildirmaz, co-head of the ADP Research Institute.
“This trend is further evidenced by the significant wage growth we’ve seen for new entrants in most industries, which is great news for college graduates poised to enter the workforce this spring.”
According to Meyers Research, job quits are close to their highest level on record, and 25% of millennials report they voluntarily left their job in the past year.
“In the housing industry, stagnant wage growth has been damaging. Nationally, only 48% of households can afford the median-priced new home,” said Ali Wolf, Meyers research director of economic research. “If sustained, the uptick in wage growth should help housing affordability across the country, even if just marginally.”
Job holders are experiencing strong gains, up 4.8% in March compared to a year ago. This marks the strongest growth for job holders since September and is driven by firms hoping to retain their workers as it becomes more difficult to find available workers to hire.