State of the Labor Market Summit 2017

ADP Research Institute®

State of the Labor Market Summit 2017

State of the Labor Market Summit 2017The ADP Research Institute welcomed some of the brightest minds in labor economics to use ADP’s empirical data to complete their own in-depth research into the U.S. labor market. Premiering on July 25th 2017, the ADP Research Institute Summit on the State of the U.S. Labor Market was the first annual forum where these research findings, overall trends in the labor market, and their impact on the U.S. economy were shared and discussed.

Key Trends in the U.S. Labor Market

Wage Stickiness During the Great Recession

Erik Hurst, John Grigsby and Ahu Yildirmaz
University of Chicago Booth School of Business and ADP Research Institute

Exploiting novel administrative employer-employee matched data, we document a series of new facts about the flexibility of individual wages. Our sample provides paycheck information for 15 to 20 million U.S. workers per month starting in 2008. The data provide monthly snapshots of wage rates with little error, permitting robust measurement of individual wage stickiness. Approximately 7% of workers in our sample experience a wage change in an average monthly. Wage flexibility is seasonal, with a large number of small wage changes occurring in January and July. Geographies and industries with deep recessions observed increased realized wage stickiness and more wage cuts during 2009. Finally, we examine wage setting behavior within firms. Wages appear less flexible for contracting firms than for growing firms, and there is substantial heterogeneity in wage setting behavior across different types of workers within a given firm.

Using ADP Payroll Microdata to Measure Aggregate Labor Market Activity

Tomaz Cajner, Leland Crane, Ryan Decker, Adrian Hamins-Puertolas, Christopher Kurz and Tyler Radler
Federal Reserve, Washington D.C.

We evaluate the efficacy of ADP payroll microdata to create new statistics that complement existing government measurements. We develop a set of weekly aggregate employment indexes from 2000 to 2017, which allows us to measure employment at a high frequency. We test whether the information contained in the high-frequency and timely estimates of employment assist in forecasting current employment. The large sample size of ADP data—similar in terms of private employment to the BLS CES sample—implies potentially high informational value of these data and our results confirm this conjecture. The timeliness and frequency of the ADP payroll microdata marginally improves forecast accuracy of both current month employment and revisions to the BLS CES data. Importantly, augmenting publically produced information on employment with the ADP payroll microdata improves our understanding of the cyclical state of the economy.

Solving the Productivity Puzzle: Aging and Productivity

Mark Zandi, Dante DeAntonio and Adam Ozimek
Moody’s Analytics

The workforce is rapidly aging as the large baby boomer cohort is in or is fast approaching retirement. This is having wide-ranging impacts on the economy. In this paper we utilize data derived from ADP payroll records to assess the impact of the older workforce on wage and productivity growth. We find that the impact is significant, with older workers having a materially negative impact on the wages of younger workers and thus on aggregate wage growth. The slowdown in wage and productivity growth in recent years is thus partially attributable to aging, and this will continue as the boomers slowly leave the workforce over the next two decades.

Revisiting Minimum Wages, Employment, and Spillovers: A New Case Study of New Jersey and Pennsylvania

Alan Krueger and David Cho
Princeton University

In November 2013 voters in New Jersey approved a constitutional amendment to raise the state’s minimum wage from $7.25 an hour to $8.25 an hour effective January 1, 2014. The constitutional amendment indexed minimum wage increases to consumer price inflation in years after 2014. The minimum wage in neighboring Pennsylvania has remained at the federal level of $7.25 since 2009. This paper will use ADP data and BLS QCEW data to examine the impact of the 14 percent hike in the New Jersey minimum wage on employment, work hours and wage spillovers by comparing New Jersey and Pennsylvania employers.

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