Advertised Wage Growth Slowed in May, Especially in Software Development

Advertised wage growth is slowing in most job categories, with software development being especially weak.

Based on wages and salaries advertised in job postings on Indeed, the posted wages in the United States grew 5.3% year over year in May — down from a peak of 9.3% in January 2022 — according to a report by Indeed Hiring Lab.

“While still very strong compared to historic norms, annual growth in advertised wages in the U.S. has dropped by almost half from its early 2022 peak, and could fall to pre-pandemic levels as soon as the end of this year, or early 2024,” Nick Bunker, economic research director for North America at Indeed Hiring Lab, said in the report.

In 2019, posted wage growth was running at an average rate of 3.1%, according to the report.

The pullback in wage growth is happening in most occupational categories, with just 29% of categories having wage growth that is the same or higher than it was six months earlier, the report said.

“Software development — a sector highly exposed to recent high-profile layoffs and hiring freezes in the tech sector — is a good example of weakness,” Bunker said in the report. “Not only have job postings for that sector dropped by almost 60% over the past year, but posted wage growth is also currently less than half of what it was in November.”

Together with software development, driving and childcare are also seeing a faster decline than overall posted wage growth, according to the report.

Three occupational categories that are seeing slower decline than overall growth are management, therapy and sales.

Broadly speaking, the largest slowdowns in wage growth are happening in lower-paying sectors — sectors that had seen much quicker wage growth than other sectors in recent years.

“The much-celebrated compression of wage inequality of the past two years seems to be ending,” Bunker said in the report.

Human resources and payroll firm ADP reported May 3 that while employers went on a hiring spree in April, they were less quick to raise wages.

“The slowdown in pay growth gives the clearest signal of what’s going on in the labor market right now,” ADP Chief Economist Nela Richardson said at the time. “Employers are hiring aggressively while holding pay gains in check as workers come off the sidelines.”