Wage growth slows for job hoppers

The September ADP report showed private sector hiring fell short of estimates. One trend that is starting to emerge is that job hoppers are not seeing the wage growth they had coming out of the pandemic. Yahoo Finance's Josh Schafer, Alexandra Canal, and Madison Mills break down the recent report and ongoing turbulence in the labor market.

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Video Transcript

JOSH SCHAFER: It's jobs week, labor week, lots of labor data.

ALEXANDRA CANAL: Your favorite week.

JOSH SCHAFER: It's one of my favorite weeks. It's exciting.

MADISON MILLS: You love labor data?

ALEXANDRA CANAL: Oh, he loves it.

JOSH SCHAFER: And Labor Day because we don't have to work. But there was a fun chart today. All right, this chart, you guys are going to like this chart. It's interesting. So we had the ADP report out today. And what we're looking at here is annual wage growth. In that top purple line, you're seeing people that change jobs. On the bottom blue line, you're seeing people that stayed in their job.

You can see over the pandemic in 2022, we saw that big increase for what we were calling those job hoppers, right? People were leaving jobs. Some people were staying at jobs for only six months, because they're seeing a near 16% increase in their pay when they were leaving. That was down to 9% in September. And you see what you see happening there is that margin in between job changers and job stayers coming a lot closer together, which might be a sign that the labor market is cooling. And we're not going to see as many people leaving their jobs.

Maddie, my overall takeaway just looking at it was maybe we're finally done talking about job hopping, right? I feel like that was the talk of 2022 we had people that were staying at jobs, it seemed like based on some anecdotal stories, you know, four or five months. And then they were just popping to a new job.

MADISON MILLS: And the great resignation narrative feels like it can finally be put to bed. We also got in the JOLTS data just to hop back another day, information about quits and layoffs being relatively unchanged. So I'm really curious to your point about Friday's jobs data and what we're going to see in terms of whether or not those layoffs versus hiring numbers are continuing to be sort of a leading indicator for the Fed heading into that November meeting.

ALEXANDRA CANAL: Yeah. We were just talking in the break, what does this all mean for the Fed? And I think it means different things when you think about the future of rate hikes, of monetary policy. I think the Fed has its work cut out for it in the next November meeting, whether or not they're going to choose to raise those interest rates. But certainly, the wage growth slowing down that significantly. It's crazy that in 2022, you could get a very sizable increase.

JOSH SCHAFER: And think about what was happening in 2022, inflation was rampant, right? Because when you have wages that high people have the ability to pay up for things. And so that's why the Fed has been so concerned about wages and why we're going to take a look at wages again on Friday. When you have wages continuously high, the consumer is going to keep spending, that resilient consumer we keep talking about. You want those wages to come down eventually pace with inflation at 2%, so then everything is a little bit normal. So we're starting to see things come into a, quote unquote, "better balance," as Mr. Powell likes to say.

ALEXANDRA CANAL: The industries too are interesting, too, because you think about the tech industry, they went through a lot of layoffs, right, because there was an over hiring during the pandemic. Then we saw a bit of that correction. So it varies by industry as well. Just the labor market is a very interesting story right now. It's a very interesting place.

MADISON MILLS: Yeah. Yeah, right. It's always interesting, right?

JOSH SCHAFER: Working's fine.

ALEXANDRA CANAL: Yeah. We're doing it right now. We like to work. We love our jobs.