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Nela Richardson: latest market views
ADP
Summary
Nela Richardson is chief economist and ESG officer at ADP and head of ADP Research, where she led the revamp of the ADP National Employment Report with the Stanford Digital Economy Lab; she was previously chief economist at Redfin and an investment strategist at Edward Jones.
Chorus has 16 views from Nela Richardson across 3 episodes on Bloomberg Surveillance and On Investing (Charles Schwab) since October 8, 2026.
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Bottom-income households are boosting earnings via overtime, not pay; sustaining that spending is questionable.
Richardson argues that base pay is roughly flat at about 3% a year, but earnings for the bottom income quartile are growing at double digits because those workers are putting in more overtime, shift work and extra hours. They are doing this to keep up with higher prices, so spending power is being maintained. She questions whether this can last, since it means working more to outrun inflation, and notes that the top earners' spending depends on the stock market wealth effect.
“everybody's getting about the same amount of base pay. They're getting about 3% from last year... Earnings is how much overtime, how many hours, what the bonuses are. That's where all the action is. And for the people at the bottom of the quartile in terms of income, they are working a whole lot more than everybody else.”at 12:15
Bloomberg Surveillance: Bloomberg Surveillance TV: October 30th, 2026 ·
Wages are not a source of inflation; ECI shows base pay normalizing near 3%.
Richardson says that wages are not a source of inflation, and she sees that in the employment cost index. Base pay is about 3% from last year, which she describes as normalized and boring. The argument rests on the ECI and on the fact that the wage growth at the bottom comes from working more hours, not from higher hourly rates.
“the key thing coming from the jobs market is wages are not a source of inflation, and that's the bottom line. You see that in the ECI.”at 16:17
Bloomberg Surveillance: Bloomberg Surveillance TV: October 30th, 2026 ·
AI's employment impact is modest overall but about 3% a year for early-career AI-exposed white-collar jobs.
Richardson's ADP Canaries dashboard, built with Stanford, tracks AI's employment impact monthly. Its finding is that the effect is not widespread, but it is about 3% a year for early-career workers in AI-exposed white-collar and IT jobs. Job gains are coming from health care, leisure and hospitality, while IT and information sectors are only about 2% of the labor market. The impact is concentrated at early career stages, since later-career workers are seeing more income and employment.
“It's actually been very modest, but for early career in AI exposed fields in white collar jobs and IT, yes we're seeing an impact of at about 3% per year. It's meaningful impact”at 17:16
Bloomberg Surveillance: Bloomberg Surveillance TV: October 30th, 2026 ·
Hiring is concentrated in healthcare, with leisure gains and weakness in finance, professional services and information.
Richardson says the sector story is unchanged even though the headline number differs. Healthcare is driving job additions. Leisure and hospitality is still adding jobs despite weak consumer sentiment. Finance and professional business services are still weak. Manufacturing is modestly up, with slightly stronger construction gains. The information sector has even posted outright losses, with only about 3,000 jobs created in September.
“[Healthcare] driving those jobs. We're still seeing additions in leisure and hospitality despite consumer sentiment being downtrodden. We're still seeing weakness in finance and professional business jobs”at 18:47
On Investing (Charles Schwab): What 26 Million Paychecks Reveal About the Economy (With Nela Richardson) ·
Manufacturing & industrial policy
Rising overtime in upstream manufacturing (chemicals, power, steel) signals an economic boom starting.
Overtime pay is rising in upstream industries such as chemicals, electricity and steel, but not in consumer manufacturing like apparel or beverages. Manufacturers are struggling to meet AI buildout demand and cannot hire enough workers for second and third shifts, so they pay overtime. Richardson thinks manufacturing will lead services, but headcount alone will not show it, so pay premiums and overtime are the better signals. Upstream sectors power the start of an economic boom cycle.
“We're seeing it in upstream industries. Those industries, whether it's chemical or electricity or steel, that power a boom and power the start of an economic boom cycle.”at 25:37
On Investing (Charles Schwab): What 26 Million Paychecks Reveal About the Economy (With Nela Richardson) ·
Wage-price spiral risk is low; wages are nowhere near overheating even when inflation exceeded 7%.
Richardson argues the labor market was never at risk of a wage-price spiral, even when US inflation was above 7%. Current inflation is well below that level and has improved. She says it would take a tectonic shift to move her from watchful to worried about wages. She ties base pay to labor tightness, noting firms are reluctant to raise base pay and instead use off-cycle bonuses in hot markets.
“Because even when inflation was above 7%, in The United States, the labor market was at no risk of tipping over into a wage price spiral. It just didn't happen. And we're nowhere near 7%.”at 28:59
On Investing (Charles Schwab): What 26 Million Paychecks Reveal About the Economy (With Nela Richardson) ·
Real wage losses from 2021–2024 inflation explain why consumer sentiment remains depressed.
ADP and University of Chicago research tracked about 16 million workers from 2021 to 2024. 43% saw real wage declines, averaging 8%. Even among job changers, more than 30% saw real declines. Workers try to outrun inflation by switching jobs, but they can only do that once. Lost purchasing power is the starting point for many people, and it explains why consumer sentiment is at rock-bottom levels. Workers care about purchasing power, not the inflation rate.
“But here's where I am worried... showed that during that high inflation period, 43% of workers saw real wage declines, and the average decline was 8%.”at 29:24
On Investing (Charles Schwab): What 26 Million Paychecks Reveal About the Economy (With Nela Richardson) ·
Low-income workers' pay growth is driven by longer hours; base pay is nearly identical across income quartiles.
Gross pay growth is faster for the bottom 25% of earners, but that comes from working more hours. Base pay growth is essentially indistinguishable across quartiles. The lower-income cohort therefore has to work more hours just to keep pace with inflation. Richardson calls this the reality of life now: keeping a standard of living on lower pay requires more hours.
“The bottom pay growth is growing faster, and that's true. It's because they're working more hours. But if you look at the base, they're basically indistinguishable from each other.”at 33:02
On Investing (Charles Schwab): What 26 Million Paychecks Reveal About the Economy (With Nela Richardson) ·
AI is hurting early-career workers in exposed fields while augmentation helps older workers.
ADP's Canaries dashboard, built with Stanford's Digital Economy Lab, finds AI's effect shows up in early-career workers in exposed fields such as customer service and software development. Workers aged 22 to 25 have seen a steady contraction of about 3% a year since ChatGPT's rollout. Non-business fields are not seeing the same contraction and are growing slightly, and later-career workers are seeing employment pick up. Richardson's distinction is that AI that augments advantages older workers, while AI that automates disadvantages younger ones.
“AI's impact seems to be showing up in early career for AI exposed fields, like customer service agents or software developers... for those younger workers between 22 to 25, you're seeing a pretty steady contraction since the rollout of ChatGPT at about 3% a year.”at 34:09
On Investing (Charles Schwab): What 26 Million Paychecks Reveal About the Economy (With Nela Richardson) ·
AI is eroding the value of some high-value tasks, such as explaining technical details, since ChatGPT's launch.
Richardson argues that some high-value tasks are losing value since ChatGPT was released in October 2022. Explaining technical details is her example, because AI can now do it in a way that was not possible about five years earlier. ADP's payroll data lets her track how task values change over time, and she plans to extend this from IT to 700+ occupations and track it within industries and companies, to help employers see which tasks are gaining value and how to upskill workers toward them.
“So there are some high value tasks that are actually losing value with the inception of ChatGPT in October 2022. One of those things is explaining technical details.”at 36:57
On Investing (Charles Schwab): What 26 Million Paychecks Reveal About the Economy (With Nela Richardson) ·
AI productivity gains depend on a skilled workforce, not technology alone.
Richardson uses history to argue that technology needs skilled workers to deliver productivity. US productivity was lowest in the 1970s and early 1980s, when the baby-boom workforce entered with much less experience. Productivity peaked in the late 1990s, when the internet was credited, but she argues that the workforce then was the most skilled the US had seen and knew how to use the technology. She says the internet arriving in the 1970s would not have produced the same boom. Her optimism rests on young people building the skills to harness AI for economies, employers and workers.
“If the Internet had come in the nineteen seventies, would we have had the same boom? I don't think so. ... I think you need skilled workers.”at 39:06
On Investing (Charles Schwab): What 26 Million Paychecks Reveal About the Economy (With Nela Richardson) ·
The labor market is hotter than people credit, with ADP tracking 95,000 jobs a month and rising overtime.
She says stability is present but uneven, with healthcare still the reliable source of hiring, and jobless claims are flat week to week even though context is changing. Long-term unemployment has risen to 27.1% of the unemployed in the latest BLS report, so the headline needs context. She argues the market is hotter than credited based on ADP's run rate of about 95,000 jobs a month and stronger overtime hours in manufacturing. Gains are modest but people are working more on the factory floor.
“I actually think this labor market is a little bit hotter than people are giving credit to it. In our numbers at ADP, we're tracking right now about 95,000, a run rate of 95,000 jobs a month.”at 20:08
Bloomberg Surveillance: Bloomberg Surveillance TV: October 8th, 2026 ·
Higher rates will first hit small bank-dependent firms' hiring; that has not shown up yet.
She expects rate transmission to Main Street to show first at small firms that depend on bank loans, not at larger companies. Small firms are the intense signal of that mechanism. For now, firm hiring still looks okay, so small firms are not yet bearing the burden of the rate increase. She says that could change as the cycle continues or if rates rise again.
“Where you're probably gonna see it is in small firms. So you may not see that interest rate bleed into larger companies and their hiring. You might see it more in the small firms that are more dependent on bank loans.”at 21:51
Bloomberg Surveillance: Bloomberg Surveillance TV: October 8th, 2026 ·
Manufacturing & industrial policy
Capital investment is less rate-sensitive than before; upstream manufacturing is expanding despite high rates.
She says the economy is less rate-sensitive for capital investment than it has been historically. Upstream sectors such as transportation equipment, industrial chemicals and technology hardware are seeing rising activity. She reads that as evidence the economy is ready for an investment boom despite higher rates. Some sectors will keep expanding while others retreat, so the picture is not uniform.
“I think when it comes to the capital investment, the economy is more rate insensitive than it has been historically.”at 22:48
Bloomberg Surveillance: Bloomberg Surveillance TV: October 8th, 2026 ·
Consumer-oriented sectors show no overtime growth, so consumer spending is not really taking off.
She notes that overtime is not rising in consumer-oriented sectors such as apparel and food and beverage. That signals consumer spending is not really taking off. Consumers may ultimately bear the biggest burden from higher interest rates, even though these sectors are still spending despite the rates.
“Notably, we're not seeing overtime in consumer oriented sectors like apparel, like food and beverage. So this is not something where consumer spending is really taking off.”at 23:36
Bloomberg Surveillance: Bloomberg Surveillance TV: October 8th, 2026 ·
Manufacturing & industrial policy
Policy uncertainty, including geopolitics, causes firms to retrench from long-horizon investment projects.
She says policy uncertainty has historically pulled back investment. When firms plan big projects five, ten or twenty years out without certainty about the landscape, they retrench. Geopolitics is one source of that uncertainty, and it can hold back investment even outside the monetary story. Hiring stays modest partly because firms can add output through hours rather than headcount.
“what could pull them back, what has pulled them back in the past is uncertainty on the policy landscape. ... if they look at geopolitics ... that's going to lead to a retrenchment.”at 24:13
Bloomberg Surveillance: Bloomberg Surveillance TV: October 8th, 2026 ·
Shows
- Bloomberg Surveillance · 2 episodes
- On Investing (Charles Schwab) · 1 episode
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