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Five years after COVID-19 halted the U.S. economy, the labor market looks fundamentally different. What began as a temporary disruption has permanently reshaped worker expectations and employer strategies, creating lasting challenges for how organizations attract and retain talent, according to ADP Research.
According to the authors of the latest ADP data report, wage growth stabilized at 2.5% between June 2024 and May 2025—a significant shift from the volatile swings of the early pandemic years and the modest growth that characterized the pre-2020 economy.
Wage growth demands strategic compensation thinking
The numbers tell a compelling story about how compensation has evolved. ADP data shows wages have not only recovered from pre-pandemic declines but have established a new growth trajectory that appears sustainable. However, researchers say, the path to this stability involved dramatic fluctuations that taught valuable lessons about workforce composition and compensation strategy.
During the initial months of the pandemic, average wages rose sharply—not because employers were handing out raises, according to ADP, but because lower-paid workers were disproportionately affected by job losses.
As the economy rebounded and these workers returned, average wages declined temporarily before settling into their current growth pattern. According to the report’s authors, “the boom-and-bust drama of
