Pay increases for American workers have continued to decline from the highs reached during the post-pandemic reopening, affecting both those staying in the same job and those finding new positions. According to new data from ADP, annual wage increases for workers who remained in their jobs rose at the slowest rate in nearly three years in June, while wage increases for job changers declined for the third consecutive month.

ADP’s chief economist, Nela Richardson, highlighted that we are now in a different regime where job-stayer growth, which was previously stable or rising, is decreasing. The key question is how low this growth will go, with pre-pandemic levels still uncertain. In June, wages for job stayers increased by 4.9% year-over-year, down from 5% the previous month and the slowest growth since August 2021.

Wages for job changers rose by 7.7%, a decrease from 7.8% in the prior month and significantly lower than the peak of 16.4% in June 2022. Data from the Bureau of Labor Statistics showed 8.14 million job openings at the end of May, up from 7.92 million in April, indicating that the labor market is cooling but not entering a rapid decline.

ADP’s National Employment Report revealed 150,000 new private sector jobs in June, a slight decrease from 157,000 in May. Richardson pointed out that a monthly job addition range of 120,000 to 150,000 is ideal, as it prevents both economic overheating and slowdown.

However, a sudden decrease in job gains could signal trouble, as the pace of economic evolution, rather than the level, is crucial. Richardson noted that the real concern would be a rapid shift from gradual to steep cooling, which could serve as a warning bell for the economy.