Job-Switcher Wage Premium Narrows
Private sector added 63,000 jobs in February with wage gains for job-switchers narrowing to 6.3% — the smallest gap since tracking began. Pay rose 4.5% year-over-year for job-stayers, while most gains came from health services and construction. January was revised down to just 11,000 additions.
The ADP National Employment Report is a collaboration between the ADP Research Institute and the Stanford Digital Economy Lab, analyzing anonymized payroll data from over 26 million U.S. private-sector employees. This report provides a high-frequency look at labor market trends, including job growth and wage dynamics for both those who stay in their jobs and those who switch. The shrinking premium for changing jobs represents a significant shift from the peak of the "Great Resignation" in April 2022, when job-switchers saw a median pay increase of 16%. The current 6.3% gain for switchers is the lowest since ADP began tracking this data, indicating a cooling labor market where employers face less pressure to offer hefty salary increases to attract new talent. ADP's chief economist, Nela Richardson, noted that the recent hiring has been concentrated in only a few sectors. This concentration means there is no widespread pay benefit from changing jobs, contributing to the record-low wage premium for those who do switch. The February job gains were the most robust since July 2025, with the education and health services sector adding 58,000 positions and construction adding 19,000. Conversely, the professional and business services sector shed 30,000 jobs, and manufacturing lost 5,000. The downward revision of January's job additions from an initial 22,000 to just 11,000 highlights recent volatility in the job market. The February data showed a divergence in hiring based on company size, with small businesses adding 60,000 jobs, while medium-sized businesses lost 7,000 positions. The ADP report often serves as a precursor to the U.S. Bureau of Labor Statistics (BLS) jobs report, though methodologies differ. Economists will be watching the upcoming BLS data to see if it confirms the trends of concentrated hiring and moderating wage growth for job-changers.
