ADP Finds Inflation Driving Worker Wage Expectations

Cost-of-living increases and strengthening economies have driven worker demand for higher wages in the U.S. and across the globe, a new report finds.

Reported by Natalie Lin

Rising cost-of-living and strengthening economies means workers have elevated expectations for pay increases, according to a study released Monday from ADP’s research division which drew responses from 18 participating countries.

For the fourth consecutive year, employees regarded money as the most significant aspect of their jobs, with 55% ranking income as the most essential factor. However, 40% of employees who prioritized pay are not happy with what their firm pays them. According to the report, employees are less satisfied with their salary than they are with any other feature that they prioritized.

“Transparent communication will be key to navigating this transition,” the report stated. “It’s important that employers clearly explain corporate initiatives and their impact on the issues workers care most about. Understanding the goals of the organization, metrics for success, and their role in achieving goals will keep employees engaged and motivated, even as their work—and the world—changes.”

Workers rank job security (46%) second only to salary in terms of importance and employers perform better in this category than any other. These were followed by: career progression (34%), enjoyment of a day of work (29%), flexibility of hours (25%), training and development (20%), job title (17%), flexibility of location (15%) and company culture (11%).

“As a provider of human capital management services, we know there is a strong link between employee benefits and employee engagement, loyalty, productivity, and overall employee experience,” says Ron Ulrich, ADP vice president of product consulting and compliance at ADP Retirement Services. “Employers can offer benefits that may help retain and even attract top talent in a shifting job market. One of the best things an employer can do is to listen to their employees about their needs, and work with partners in the benefits space to help match those needs.”

ADP survey’s revealed strong expectations for salary increases. This year, as massive inflation resets workers’ expectations, that view is once again commonplace. Based on ADP’s poll, the average pay increase in 2023 was 4%. Employees expect average pay rises of more than 5% in 2024.

However, if 2023 is any indication, many will probably be let down. Survey participants overestimated their pay increases in the previous year. Furthermore, even though most employees anticipate faster pay growth, 19% anticipated no change in their compensation compared to 16% a year ago.

Salary stagnation has barely improved. It decreased by fewer than two points to 28% in North America. The global statistics were higher, as 32% of workers said their wages had not changed in the previous year. That percentage dropped to 26% this year.

Despite a decrease in wage stagnation, 20% of workers worldwide—up from 15% a year ago—still anticipate their salary to stay the same in 2024. In the meantime, 24% of North American workers anticipate receiving the same compensation as last year.

ADP found that women’s wage stagnation really decreased more than men. In 2023, 29% of women said they had not noticed any change in their salary, down from 38% a year earlier. The percentage dropped less for men, from 28% to 24%.

“This might be because female workers are more concentrated in service-sector jobs such as health care, leisure and hospitality and retail, all of which experienced some of the biggest pay gains of the pandemic recovery,” the report stated.

The ADP’s fourth annual People at Work survey draws responses from more than 34,000 workers in 18 countries.

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ADP, workplace financial wellness benefits,
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