Switching jobs has become increasingly rewarding for workers in 2024.

New data from ADP released Wednesday shows the median year-over-year pay increase for job switchers was 10% in March, the highest rate of growth since July 2023. Meanwhile, job stayers saw an annual wage gain of 5.1% during the month.

Overall, the spread between the two figures widened for the second month in a row.

In addition to the wage data, the ADP data showed a surprise 184,000 job additions in March, per ADP, up from the 155,000 seen in February and higher than the 150,000 that economists surveyed by Bloomberg had expected. ADP's chief economist Nela Richardson said the numbers show continued signs of resilience in the labor market.

"You're still seeing a pretty solid, maybe even good to great jobs market for 2024," Richardson said on a media conference call Wednesday morning.

Wages vs. inflation

Wage increases have been a closely tracked metric by economists in the Federal Reserve's fight against inflation. The prevailing concern has been that if wage growth continued to rise, it could increase consumer demand for goods and services and send prices higher.

Richardson doesn't think ADP's recent data signals the start of a "wage-price spiral." But she acknowledged that "wages and wage growth could keep inflation higher for a bit longer."

This, Richardson said, could make the Fed's path trickier. Recent hotter-than-expected inflation readings have added to these concerns as investors fear sticky inflation could push out the Fed's interest rate cuts. And all else equal, continued wage growth won't help ease such fears.

"It could challenge the ability of the Fed to cut quickly, and I think they already know that," Richardson said.

Still, Richardson and other economists have noted that strong jobs numbers like those seen in ADP's release on Wednesday have overall been a positive for the economic story at large. Given the Fed's cautious approach to cutting, strength in the labor market has been considered a key to the economy avoiding recession while the Fed keeps rates restrictive to help fight inflation.

The next test for just how strong the labor market is will come on Friday with the release of the March jobs report.

The March jobs report is expected to show 215,000 nonfarm payroll jobs were added to the US economy last month with the unemployment rate falling to 3.8%, according to data from Bloomberg. In February, the US economy added 275,000 jobs while the unemployment rate hit 3.9%.