Pay Growth Slows As Workers ‘Come Off the Sidelines’

Private employers went on a hiring spree in April but were less quick to raise wages.

That’s according to ADP’s monthly National Employment Report, which shows that employers added 296,000 jobs last month in “a burst of hiring” even as pay increases for workers changing jobs slowed down.

“The slowdown in pay growth gives the clearest signal of what’s going on in the labor market right now,” said Nela Richardson, chief economist at ADP. “Employers are hiring aggressively while holding pay gains in check as workers come off the sidelines. Our data also shows fewer people are switching jobs.”

Of the companies that added jobs, a bulk of the increases – 229,000 – came from “servicing-providing” employees, including the leisure and hospitality sector, which added 154,000 jobs.

The construction sector added 54,000 jobs, the report said, while mining and natural resources companies added 52,000.

According to the report, pay growth continued a slowdown that began almost a year ago, with job changes in particular seeing a dramatic decline: their pay slowed from 14.2% growth to 13.2% growth, the slowest pace since November of 2021.

As PYMNTS has written, this trend is bad news for people who live paycheck to paycheck, with research showing many of them expect their financial situation to improve this year due to job changes or improvements.

Meanwhile, consumers are moving further and further onto shaky financial ground as they struggle to stay on top of bills.

“There seemed to be little cause for concern about consumers’ ability to spend and save after having built up reserves during the pandemic, as Fed-released numbers in October revealed that U.S. households held $1.7 trillion in ‘excess’ personal savings,” PYMNTS wrote recently.

Any relief evaporated, however, as further details showed that distribution to be disproportionate, with the wealthiest half of households holding 75% of those funds.

For other consumers, savings don’t even cover credit card debts, as those paycheck-to-paycheck consumers who have issues paying their bills carry average balances that make up 157% of their available savings.

And now, as seen in PYMNTS’ latest collaboration with LendingClub, “New Reality Check: The Paycheck-to-Paycheck Report,” dipping into savings significantly is a driver behind nearly 21% of consumers living paycheck to paycheck.