Dive Brief:

• U.S. wage growth sits at 3.8% in 2019, up from last year's mark of 3.4% in 2018, according to the ADP Research Institute's Workforce Vitality Report for the first quarter of 2019, released last week. The average wage level increased $1.04 since 2018, translating to an average hourly wage of $28.40.
• The growth is driven by strong gains among workers in the manufacturing and trade industries, whose average now sits at $29.55 an hour and $25.27 an hour, respectively. Company size also played a role, with large businesses experiencing wage growth at an average of 4.9%. Of the four regions measured by ADP, the West led all others with an average growth of 4.2%, although employers in the Midwest saw the highest year-over-year statistical increase. 
• However, ADP measured U.S. job growth to be "flat" at 1.9%. That could signify a potential slowdown, Ahu Yildirmaz, co-head of the ADP Research Institute, said in a statement. Industries experiencing the slowest growth were trade (0.7%), finance and real estate (1.2%) and information services and manufacturing (1.6% each).  The industries with the highest job growth were resources and mining (7.2%) and construction (5.1%).

Dive Insight:

Pay increases may be largely due to the effect of a thin job market. Employers may feel pressured to raise wages, benefits or both in order to compete for talent; in fact, nearly half of employers in a recent Suntrust Banks survey said they had done so.

But ADP's index also seemed to match what other economic observers have said about wage growth: employees may be paid more as employers vie for limited supply of them, but that won't mean an abrupt increase in the average paycheck. Fears of an economic downturn have also factored into employment decisions of late, even though few economists predict such an event to take place soon.

There's also the related issue of minimum wages. After 2019 ushered in minimum-wage hikes in 19 states (with others put on the books in the ensuing months), large employers have also agreed to big increases, including the likes of Amazon and Bank of America. Though in some cases these hikes have come at the cost of bonuses and other perks, employers nonetheless see them as a potential recruiting tool.

Skill shortages continue to affect talent sourcing efforts. "As employment growth slows and wages accelerate for both job holders and job switchers, all signs point to a scarcity of skilled talent in the labor market," Yildirmaz said. "This trend is further evidenced by the significant wage growth we've seen for new entrants in most industries, which is great news for college graduates poised to enter the workforce this spring." As part of these efforts, employers are turning to not only higher wages, but also competitive and unique perks to sweeten their employment proposition.