ROSELAND, NJ--(Marketwired - Feb 18, 2015) - The ADP® Workforce Vitality Index, which measures the total wages paid to the U.S. private sector workforce, was 106.7 in the fourth quarter of 2014.* The index rose by 4.8% between the fourth quarter of 2013 and the fourth quarter of 2014. The movement in the index depends on the contributions of wages and hours of workers who have remained in the same jobs from the previous quarter, the wages and hours of workers who switched jobs during the quarter, and employment changes. See Table1 below.
*3Q2013=100. The data is not Seasonally Adjusted.
| TABLE 1: ADP WORKFORCE VITALITY INDEX AND ITS COMPONENTS |
| Q4 2014 |
Growth Rates (Q4 2014 vs. Q4 2013) |
| WVI |
WVI |
Holders'
Hourly Wages |
Holders'
Hours |
Switchers'
Hourly Wages |
Employment |
| 106.7 |
4.8% |
2.7% |
-0.1% |
8.2% |
2.2% |
Growth in wages and employment were keys to the strong fourth quarter of 2014. Hours worked went down slightly during the quarter. Job switchers' wages grew at a much faster pace than job holders, though the gap has closed a bit year-over-year, possibly fueled by employers attempting to retain talent by offering better wage increases.
Workforce vitality varies across industries (see Table 2 below). The strongest growth over the past year has been in Construction, 8.4%, thanks to a combination of strong employment growth, wage growth and an increase in hours worked. Manufacturing WVI advanced by 6.3% due to growth in wages and employment in large companies with more than 1,000 workers. The WVI in Leisure & Hospitality and Trade advanced just over 6%, due to solid gains in both wages and employment. Financial service workers enjoyed strong wage growth of 5.9%, but experienced weak employment growth. Meanwhile, the weakest index growth has been in Professional/Business Services and the Education/Healthcare sector, mostly due to weak wage growth.
| TABLE 2: ADP WVI & YEARLY GROWTH BY INDUSTRY Q4 2014 |
| |
|
Year Over Year Growth |
| Industry Sector |
WVI Q4 2014 |
WVI |
Holders' Hourly Wage |
Holders' Hours |
Employment Growth |
| Construction |
111.4 |
8.4% |
2.3% |
0.6% |
3.8% |
| Manufacturing |
109.1 |
6.3% |
3.4% |
0.2% |
1.4% |
| Trade |
109.4 |
6.2% |
4.4% |
-0.1% |
2.2% |
| Leisure & Hospitality |
108.6 |
6.1% |
2.8% |
0.5% |
2.6% |
| Finance |
104.1 |
5.9% |
5.9% |
-0.8% |
0.3% |
| Education & Health |
104.9 |
2.7% |
1.1% |
-0.2% |
2.3% |
| Professional Services |
104.2 |
2.5% |
0.2% |
-0.4% | 3.4% |
"Though certainly not back to pre-financial crisis levels, the growth in vitality for the construction and manufacturing industries is an encouraging sign for a sustained recovery," said Ahu Yildirmaz, VP and head of the ADP Research Institute. "These two industries have historically been bell weathers for how the economy is performing overall."
As illustrated in Chart 1 below, the WVI is growing most quickly for younger workers, those under 25 years of age. During the past four quarters it grew by 8.6%. The annual turnover rate for workers under 25 was 49% in 2014 compared to an average of 23% nationwide, indicating more opportunities in the labor market for this age group. Wages for those in the under-25 group grew more than twice as fast as the wages of any other group. On the other end of the spectrum, the 55+ segment was second in terms of WVI growth. The index for these workers increased by 6.5%. Wages increased by 2.3%, which was slightly lower than the wage growth of the two middle tiers. Workers 55+ showed stronger employment growth than the other age groups. This may have been driven by a combination of workers crossing the 55 age threshold and older workers delaying retirement.
To see Chart 1: ADP WVI Yearly Growth Q4 2014 by Age, please click here: http://media.marketwire.com/attachments/201502/84173_Chart1.jpg
An improving labor market is evident from healthy growth in the WVI for full-time workers during the past year compared to part-time workers as shown in Chart 2. Both wages and employment contributed to this increase. Wages grew by 2.4% for full-time workers as opposed to only half a percent for part-time workers. Growing confidence in the labor market appears to have prompted companies to create and hire more full-time positions than to attempt to manage with part-time positions.
To see Chart 2: ADP WVI Yearly Growth: Full Time vs Part Time at Q4 2014, please click here: http://media.marketwire.com/attachments/201502/84212_Chart2.jpg
The 1st Quarter 2015 ADP Workforce Vitality Report will be released on April 22, 2015.
About the ADP Workforce Vitality Report
The ADP Workforce Vitality Report was developed by the ADP Research Institute in collaboration with Moody's Analytics. It is an unprecedented, in-depth quarterly analysis of the overall vitality of the U.S. labor market based on actual data that identifies labor market trends and dynamics across multiple dimensions. These dimensions include employment growth, job turnover, wage growth and hours worked. In addition to the macro data presented in the report, there are also segment-specific findings by industry, state, gender, age, and experience. More information about the report can be found here. A glossary of key terms can be found here.
About Moody's Analytics
Moody's Analytics helps capital markets and risk management professionals worldwide respond to an evolving marketplace with confidence. The company offers unique tools and best practices for measuring and managing risk through expertise and experience in credit analysis, economic research and financial risk management. By providing leading-edge software, advisory services and research, including the proprietary analysis of Moody's Investors Service, Moody's Analytics integrates and customizes its offerings to address specific business challenges. Moody's Analytics is a subsidiary of Moody's Corporation (NYSE: MCO), which reported revenue of $3.0 billion in 2013, employs approximately 8,400 people worldwide, and has a presence in 31 countries. More information is available at www.moodysanalytics.com.
About ADP
Employers around the world rely on ADP® (NASDAQ: ADP) for cloud-based solutions and services to help manage their most important asset -- their people. From human resources and payroll to talent management to benefits administration, ADP brings unmatched depth and expertise in helping clients build a better workforce. A pioneer in Human Capital Management (HCM) and business process outsourcing, ADP serves more than 610,000 clients in 100 countries. ADP.com.
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