American Wage Growth Hits New Lows as Job Market Cools

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.

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    George Stanton

    George Stanton is a seasoned freelance writer specializing in finance and economics. With over a decade of experience in the industry, George has built a reputation for delivering insightful and well-researched articles that cut through the jargon and provide clear, actionable information. George's work has been featured in numerous respected financial publications, where he covers a wide range of topics including market trends, investment strategies, and economic policy. His ability to break down complex financial concepts into understandable content makes him a valuable resource for both novice and experienced investors. Committed to integrity and accuracy, George combines his deep understanding of the financial world with a passion for helping readers make informed decisions. When he's not writing, you can find George analyzing market data, attending financial conferences, or sharing his knowledge through speaking engagements and workshops. Connect with George Stanton to stay updated on his latest articles and insights into the ever-evolving world of finance.

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