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MainStreet Macro: Coming soon: A powerful new tool for measuring the U.S. labor market

August 30, 2022 | read time icon 3 min

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Job growth is one of the most important indicators of the economy’s health. Pay and earnings data is important to Main Street for both workers and businesses. 

To meet those demands for robust information, the ADP Research Institute is relaunching the ADP National Employment Report (NER). Using fine-grained, high-frequency data, the new report will capture intelligence on both jobs and pay to deliver a richer and more useful analysis of the labor market.

The NER is the cornerstone of a collaboration between the ADP Research Institute and the Stanford Digital Economy Lab that we announced in April. 

Through this collaboration, ADPRI and Stanford researchers will develop projects with the goal of unearthing incisive, comprehensive labor-market insights. 

The NER debuts on Wednesday. Here are three features to watch.

The NER is independent

The relaunched ADP NER is an independent estimate of change in private-sector, U.S. employment and wages derived from real-world payroll data. The new measures leverage the jobs and wage data of more than 25 million workers to provide a representative picture of the country’s labor market.

Previously, the report was a forecast of the Bureau of Labor Statistics’ monthly jobs survey. Now, instead of predicting the government’s job estimates, the NER will measure trends under way at companies served by ADP.

The NER is comprehensive

The new report will offer job data by industry, establishment size, and U.S. census region.

It also will track gross earnings, including tips, bonuses, and commissions.

Each month, data from about 10 million U.S. jobs will be used to estimate annual salaries measured by the report. Our researchers track the same cohort of anonymized workers over time, observing each of them over a 12-month period to compute individuals’ year-over-year changes in pay.

Pay growth will be reported by industry, establishment size, state, age, and gender.

While our data is dominated by people who have been employed by an ADP client for a year or more, it also captures pay changes for job-switchers we observe each month.

When labor markets are tight, job-switchers are able to command big pay increases. When labor markets soften, pay increases for job-switching tend to shrink.

During this time of soaring inflation, workers are worried about their cost of living and whether to ask for a raise. Companies are trying to figure out how to deal with added labor costs even as other inputs also get more expensive. In this environment, pay insights will be an important contribution to our understanding of the labor markets.

The NER is high frequency

In addition to monthly data on jobs, we’ll also provide weekly data for the preceding month.  Weekly data will be available by industry, establishment size, and U.S. census region.

Weekly data provides economists and policymakers with real-time insights on how the labor market is evolving and what kind of trends are emerging.

My Take

The last three years have brought a remarkable shift in the economy, the labor market, and the workplace. As the job market undergoes a post-pandemic transformation, our approach to measuring job and pay trends also needs to evolve.

These three features of the new NER – an independent, comprehensive, high frequency estimate of private-sector employment – reposition ADP data.

The scale and breadth of the new NER will be more useful to a broader audience of businesses and governments. It also will deliver on ADPRI’s mission to provide data-driven insights and reliable economic indicators, our unique contribution to improving the world of work. We hope you’ll take a look and let us know what you think.

Webinar: ADP National Employment Report – Methodology Presentation