Five timely insights for HR leaders about the post-pandemic labour market

Five years after Covid-19 halted the US economy, the labour market looks fundamentally different. What began as a temporary disruption has permanently reshaped employee expectations and employer strategies, creating lasting challenges for how organisations attract and retain talent, according to ADP Research.

According to the authors of the latest ADP data report, wage growth stabilised 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 characterised 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 employees were disproportionately affected by job losses.

As the economy rebounded and these employees returned, average wages declined temporarily before settling into their current growth pattern. According to the report’s authors, “the boom-and-bust drama of the pandemic has ushered in a shift toward stronger wage growth.”

In a conversation with HR Executive, ADP Chief Talent Officer Jay Caldwell advises that HR leaders face the task of managing wages without compromising employee satisfaction and a sense of fair compensation. “The easy answer might be to increase wages, but that’s not the only key,” he says.

Caldwell says HR leaders must become familiar with the various levers they could pull, rather than relying on increasing salaries. He adds that effective total rewards strategies now combine base salary with benefits, incentives and developmental opportunities—creating comprehensive value propositions that support employees while managing organisational costs strategically.

Workforce demographics reveal the need for life-stage flexibility

The research reveals that the pandemic’s impact on workforce composition extends beyond temporary disruptions. Young employees aged 16-24, who initially saw their representation drop from 11.7% to 9.6% during the early months of the pandemic, now comprise 12% of the workforce, according to ADP.

Meanwhile, the workforce has shown remarkable stability in other age segments, according to the report. Employees over 45 have maintained their 42% share throughout the pandemic period, with particularly notable growth in the 65-74 age group, which increased from 4% in 2019 to 6% by 2025.

These demographic patterns create complex challenges for HR leaders who must design policies for an increasingly diverse workforce, says Caldwell. He notes that a thoughtful strategy moves beyond age-based principles to understand individual circumstances and life conditions.

“You can’t just assume that because someone’s a certain age, they’re at a certain stage in their career or have certain needs,” Caldwell emphasised. “Flexibility is really important, and it should relate to life stages and segments.”

This approach encourages HR teams to develop nuanced strategies that address specific life-phase needs, according to Caldwell. These range from financial wellness programmes to supporting retirement planning to student loan repayment assistance for younger employees navigating early career challenges.

Technology enables unprecedented personalisation

Modern HR technology platforms have revolutionised how organisations deliver personalised benefits and support. These sophisticated systems can now provide tailored recommendations based on individual circumstances, creating what Caldwell describes as “old cafeteria plans on steroids.”

The power of these tools lies in their ability to educate and guide employees toward optimal use of benefits. “Platforms today can serve up various options your workforce can leverage in different ways,” Caldwell says. New solutions are designed to help employees understand what benefits they have and how to use them, he says, as well as to tailor recommendations based on their family or health situation.

Caldwell highlights that leveraging technology to personalise communications and remind employees about available benefits significantly enhances their effectiveness. He says timing is crucial for maximising the value of these benefits.

For example, retirement calculators can demonstrate how even small changes in contributions impact long-term outcomes, while automated reminders can link benefits enrolment to major life events or salary adjustments. However, despite the availability of these tools, many employees still miss opportunities—creating a clear chance for HR leaders to improve engagement and utilisation.

Learning and development must match career stages

Employee development priorities vary significantly across career stages, requiring tailored approaches that recognise these differences, says Caldwell. Early-career employees typically prioritise skills development and experiential learning, while more experienced employees focus on security, compensation and fulfilment.

Technology plays an increasingly important role in customising these encounters. “Organisations are leveraging technology to personalise training and development,” Caldwell observes. He says that today’s most innovative platforms can serve up internal gigs, stretch projects or mentorship opportunities tailored to each employee. He says these initiatives can empower employees to find experiences aligned with their career stage and passions.

AI further enhances learning effectiveness by creating safe environments for skill practice. “AI can help propel experiential development, whether that’s simulations or helping you through work problems in a safe environment,” Caldwell notes. He observed that this combination of personalised learning pathways and AI-enhanced experiential development helps organisations retain talent while accelerating skill development across their workforce.

Data and technology have become strategic imperatives

The pandemic’s digital acceleration has made technology and data analytics essential competencies for HR leaders, according to Caldwell. This shift enables more targeted, immediate support that enhances rather than replaces traditional development programmes. “Now, tools can support someone in the moment for their specific situation, like preparing for a difficult compensation conversation,” Caldwell explains.

Additionally, data-driven insights now enable HR teams to anticipate talent needs more accurately, evaluate programme effectiveness, and understand how interventions impact engagement, retention, and career progression. However, technical capability must be paired with business acumen.

Caldwell cautions: “Being an intelligent consumer of data is critical.” To avoid pitfalls, he reminds HR leaders that enterprise data is not always clean and must be interpreted within the context of the organisation’s structure and business realities.

Paying attention is critically important, especially in informing business decisions, Caldwell emphasises. “The world is dynamic, and understanding trends helps HR leaders proactively design programmes, workflows and experiences that meet employees where they are today and where they’ll be tomorrow.”

About the Author:

Jill Barth is HR Tech Editor of HR Executive, where this article was first published.