Construction Industry Wages Increased in Q3 2014

Construction showed the second strongest growth number among industries tracked in the ADP Workforce Vitality Index, which represents the total real wages paid to the US private sector workforce

ADP Research Institute
For construction workers who remained with their existing employers over the quarter, wages increased by 0.6% from the second quarter to the third, the report said.
For construction workers who remained with their existing employers over the quarter, wages increased by 0.6% from the second quarter to the third, the report said.

The ADP Workforce Vitality Index, which represents the total real wages paid to the U.S. private sector workforce, is 110.6 in the third quarter of 2014 (2Q2011=100, Seasonally Adjusted). The Index is driven by a number of metrics including job holders’ wages, job holders’ hours worked, job switchers’ wages, and total employment. The Index grew by 0.77 percent from the previous quarter. The Index growth is mainly driven by the growth in real hourly wage rate. Employment growth has been steady from quarter to quarter while hours worked dropped slightly in the third quarter. The growth rate in the real hourly wage has been strong enough to overcome the decline in hours worked and still show an overall increase in the ADP Workforce Vitality Index.

The Index shows that the South and West regions are healthy labor markets, leading in real wage growth, as well as employment growth. While all four regions have trended up over the past three years, the gap between South and West, and Midwest and Northeast began to appear in the second half of 2012 and has been growing ever since. The South and West are growing faster than the national average, while the Midwest and Northeast are lagging both historically and for the third quarter 2014.

Among the industries tracked, Leisure and Hospitality showed the strongest growth for third quarter 2014. An encouraging sign is that Construction, a key economic driver, shows the second strongest growth number. Businesses with fewer than 50 employees are also doing better than their larger counterparts.

At the national level, the hourly wage of job holders in the lowest wage tier (below $20K) grew the slowest in the third quarter 2014, while the higher wage tier ($20K to $50K) grew the fastest. Employment growth and Hours Worked are strongest in the lowest wage tier, contributing to the fastest Index growth among all wage tiers in the third quarter.

Historically, the Index for full-time workers is growing faster than that for part-time workers. This could be driven by one or more of three factors: more full-time jobs are being created, full-time employees are working more hours, and/or full-time employees are receiving wage increases. For the third quarter, this relationship between full-time and part-time reversed as the index for part-time workers grew faster than full-time. This was due to relatively strong growth in Hours Worked for part-time and weakness in full-time.

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