Is your pay keeping pace with your local talent market?

By Liv Wang, Lead Data Scientist for ADP Research

The wage numbers that matter most to your business may be the ones coming from your own backyard. 

National wage trends provide useful context, but they don't provide the same local granularity it takes to attract and retain employees in your specific market. Local pay can move at a different pace, shaped by the industries, jobs and workers that make up the local economy.

To help employers look at trends specific to their market, ADP debuted new pay growth data enhancements in its August 2026 Pay Insights report, including data on base and gross pay for 56 U.S. metropolitan areas, in addition to base and gross pay data by worker mobility, demographics, sector, employer size, and pay quartile.

According to the report, the following 11 metro areas saw the highest year-over-year base pay growth:

1. Hartford-West Hartford-East Hartford, Connecticut

• 3.6% base pay growth
• 4.3% gross pay growth

2. Grand Rapids-Wyoming-Kentwood, Michigan

• 3.5% base pay growth
• 5.1% gross pay growth

3. Kansas City, Missouri-Kansas

• 3.5% base pay growth
• 5.1% gross pay growth

4. Miami-Fort Lauderdale-West Palm Beach, Florida

• 3.5% base pay growth
• 4.8% gross pay growth

5. Omaha, Nebraska-Iowa

• 3.5% base pay growth
• 4.9% gross pay growth

6. Orlando-Kissimmee-Sanford, Florida

• 3.5% base pay growth
• 4.8% gross pay growth

7. Rochester, New York

• 3.5% base pay growth
• 5.3% gross pay growth

8. San Diego-Chula Vista-Carlsbad, California

• 3.5% base pay growth
• 4.8% gross pay growth

9. San Jose-Sunnyvale-Santa Clara, California

• 3.5% base pay growth
• 5.6% gross pay growth

10. Seattle-Tacoma-Bellevue, Washington

• 3.5% base pay growth
• 5.1% gross pay growth

11. St. Louis, Missouri-Illinois

• 3.5% base pay growth
• 4.8% gross pay growth

Nationally, base pay increased 3.2% for all workers, while gross pay increased 4.7%.

For business owners, those granular numbers offer more than a snapshot of the local economy. They can help show where the competition for talent is getting tougher and whether compensation is keeping pace.

The goal isn't to chase every movement in wages. It's to understand what's driving the trend and use that information to make better decisions about hiring and retention.

What does the gap between base and gross pay tell you?

The distinction between base and gross pay is particularly useful. Base pay reflects contracted pay rates and tends to represent more lasting changes in compensation, while gross pay includes base pay plus bonuses, commissions, tips, overtime pay and other earnings. It provides a broader view of what workers are earning and can offer clues about changes in income and spending power in your local economy.

These two measures tell you about your labor market and how local employers are responding to changing economic conditions. That difference can inform different business decisions. Strong base-pay growth may signal sustained pressure on employers to raise wages to stay competitive for talent. Faster gross-pay growth could indicate that employers are also considering short-term incentive strategies.

The data also lets businesses look more closely at who is seeing those gains. Are job-changers seeing stronger pay growth than people who stay with their employers? Are wages rising fastest in sectors where hiring is most difficult?

Those details can help turn a broad wage trend into a more useful picture of the local talent market.

Use the data to sharpen recruiting

Once the pressure points are clear, look at the jobs that matter most to your business. Which positions take longer to fill, where are open jobs staying vacant, and where are candidates choosing competitors?

If pay is lagging in roles where competition for talent is strongest, compensation may be the first place to look. Local wage data can help determine whether starting pay is competitive and where an adjustment could make the biggest difference.

That doesn't mean every business needs to match the highest offer in the market, but it does mean they need to understand the alternatives available to candidates and make deliberate choices about where to compete.

In conjunction with local wage trends, employers should also consider broader conditions when developing their talent strategy. For example, an ADP analysis found wages have not kept up with inflation in recent years. Understanding deeper implications like this can help employers identify where the opportunities are to stand out against the competition.

Pay is only one part of that decision. If you don’t have much room to increase compensation, you can look at other parts of the offer, including flexibility, career development, training and benefits. The right combination depends on the workers being recruited and what competing employers are offering.

For example, skills development is becoming critical as artificial intelligence rapidly changes the world of work and new skills are needed. According to ADP Research’s latest issue of Today at Work, 24% of respondents strongly agreed their education prepared them to find a job, indicating there’s some room for employers to strengthen workplace skills beyond what the traditional education can provide.

The key is to base your decisions on local market data and the latest talent trends rather than guessing what candidates want.

Don't wait for turnover to reveal the problem

The same data can help identify retention risks before employees walk out the door.

When outside wages rise, existing employees see those opportunities, too. If their pay hasn't kept pace with the market, some may decide that changing jobs is the best way to increase their earnings. That risk can be especially high for strong performers and employees in roles that are already difficult to fill.

Regular compensation reviews can help identify those pressure points. Compare pay for critical roles with local trends. Look at positions where hiring has become more difficult or turnover is costly. Then consider whether targeted pay adjustments could help retain the employees who are most valuable to the business.

But don't assume pay is always the answer. If pay is competitive but turnover remains high, look beyond the paycheck. The problem may be career opportunities, management or flexibility.

That diagnostic approach matters. Local wage data can tell you where to look, but it doesn't tell you to give everyone a raise. The goal is to understand the problem before deciding how to address it.

Turn local data into a talent strategy

Local wage data is most useful when it leads to better decisions.

Ask whether pay is competitive for the roles that are hardest to fill, look at whether job-changers are seeing larger gains than employees who stay, and consider whether the difference between base and gross pay points to a longer-term shift in compensation or a greater role for variable earnings.

Then decide what, if anything, needs to change.

There won't be one answer for every business, which is why local data matters. National averages provide context, but local trends show what businesses are facing in the market where they actually compete for talent.

The better that market is understood, the easier it is to make informed choices about where to invest, where to adjust, and where to look beyond compensation to attract and retain the people the business needs.

This story was produced by ADP and reviewed and distributed by Stacker.