US workers’ wages rose by 4.4% in the fourth quarter with the average wage rising by $1.27 to $30.19 per hour, according to the ADP Research Institute’s Workforce Vitality report. But a look behind the number tells a different story.
Average wage growth is higher than expected because of significant job losses among low-wage earnings, according to the report. Higher-income workers saw flat wage growth compared to lower-income workers.
“The headline wage number masks the turbulence in the job market caused by Covd-19,” said Nela Richardson, chief economist, ADP. “When you look deeper at the data, it shows that the significant job losses we’ve seen in the lower income positions has inflated the overall average wage growth. For that reason, it looks like wages are growing at a healthy clip, when for the majority of workers, wages were either mostly flat or barely growing above inflation at year-end.”
Workers making more than $75,000 per year saw their wages rise by 0.1% in the fourth quarter while wages for those making between $50,000 and $75,000 fell by 0.4%.
For those making between $20,000 and $50,000, their wages rose by 1.9%.
Those with jobs making less than $20,000 saw wages actually grow by 6.2%. However, the report noted this group suffered greater job losses with the remaining jobs in this group consequently improving their wages compared to the prior year.
Richards also noted the wage disparity between males and females that existed prior to the pandemic continued with wage inequality increasing as workers progress in their careers.
“For job holders who kept the same job through the 2020 pandemic, female workers made $8 less than male workers in December,” she said.