ADP Pay Insights: October 2025 Wage Growth Analysis

Overview of October 2025 Pay Insights

ADP Pay Insights for October 2025, based on payroll data from over 14.8 million U.S. private-sector workers, reports median annual pay growth of 4.5% for job-stayers and 6.7% for job-changers. Although both remain elevated by pre-pandemic standards, the pace of wage acceleration has eased from earlier 2025 highs. The 2.2-percentage-point job-changer premium remains one of the clearest signals of continued labour market tightness, even as that premium stabilises.

Because ADP tracks the same workers over a 12-month period, these figures capture true year-over-year wage changes rather than shifts caused by hiring composition.

So what?

Wage pressures remain meaningful, but the labour market is transitioning from rapid acceleration to controlled cooling.

Industry-Level Wage Dynamics

Wage growth among job-stayers shows clear divergence across industries. Financial Activities led with 5.2% median growth, reflecting strong competition for specialised skills in banking, insurance, and advisory services. Manufacturing, at 4.8%, continues to post steady gains driven by demand for skilled production workers and ongoing reshoring activity. Leisure & Hospitality matched the overall median at 4.5%, while Construction and Trade/Transportation/Utilities each recorded 4.4%. Education & Health Services posted 4.3%, and Other Services trailed with 4.1%, consistent with thinner margins and lower pricing power.

So what?

Compensation pressure is likely to remain most acute in finance and manufacturing as employers compete for scarce technical and knowledge-intensive talent heading into 2026.

Wage Growth by Firm Size

Firm size remains one of the strongest predictors of wage momentum. Job-stayers at large firms (500+ employees) saw median pay rise 4.9%, compared with 4.8% at firms with 250–499 employees and 4.7% at 50–249. Smaller mid-tier firms (20–49 workers) managed 4.0%, while the smallest establishments (1–19 workers) delivered only 2.5%.

This persistent gap underscores the structural difficulty small employers face in keeping pace with the compensation capacity of larger firms—particularly when labour supply remains tight and workers continue to capitalise on job-switching opportunities.

So what?

Expect widening competitive pressure on small businesses, where retention challenges will increasingly require non-wage strategies such as flexibility, rapid progression pathways, or improved workplace conditions.

Demographic and Regional Patterns

Wage growth varied predictably across demographic groups. Workers aged 25–34 continued to experience above-median increases, supported by higher mobility and rapid career expansion. Older cohorts saw growth closer to 4%, consistent with lower turnover and more stable job tenures. Gender differences remain modest overall, though they appear slightly wider in finance and technical fields, largely due to occupational concentration rather than broad pay inequities.

Regional differences followed historical patterns. The Northeast and West posted slightly stronger wage growth, driven by higher cost-of-living dynamics and heavier representation in high-margin industries, while the South and Midwest remained closer to the national median.

So what?

Wage pressures are strongest among younger, mobile workers in high-skill coastal markets—settings where employer competition remains intense.

Interpretation of November Wage Trends

The November data point to a labour market that remains tighter than historical norms but is clearly moving into a steadier, more controlled phase. Wage growth for job-stayers has settled into a 4–5% range, signalling that the rapid gains seen earlier in 2025 have given way to a more stable pattern. The job-changer premium remains substantial, but its size is no longer increasing month to month—an indication that wage competition, while still strong, is not intensifying further.

Rather than broad wage inflation, the November landscape shows targeted pressure concentrated in large employers and in industries with structural skill shortages, such as financial activities and manufacturing. Meanwhile, smaller firms and lower-margin service sectors continue to lag, revealing the persistent bifurcation in wage-setting capacity across the private sector.

So what?

If November’s stabilisation persists, wage-driven inflation risks may gradually ease. However, industries facing chronic talent scarcity—and regions with high cost-of-living dynamics—will continue to exert upward pressure on compensation into early 2026.

Implications

The October data signal both opportunity and risk:

1. Large firms are regaining competitive advantage as their compensation capacity outstrips that of small employers.
2. Small businesses risk deeper retention issues unless they differentiate on non-wage attributes.
3. Industries with high skill intensity will continue experiencing wage pressure into 2026.
4. Regional imbalances may intensify, with coastal markets sustaining faster wage gains.
5. Younger workers will likely remain the primary drivers of wage churn and job-switching premiums.

The key takeaway is that wage growth is no longer a uniform macroeconomic force—it is becoming a segmented, structurally driven trend. Monitoring sector-specific wage acceleration versus deceleration will be essential for interpreting future cost pressures, labour availability, and inflation trajectories.

Sources

1. ADP Pay Insights, October 2025 – ADP Research Institute
2. ADP National Employment Report – October 2025
3. ADP Research Institute Technical Notes on Pay Insights Methodology