Every day, the Instawork platform handles thousands of transactions involving businesses and hourly professionals, generating a huge amount of data on hourly pay as well as other aspects of the labor market. Because hourly professionals represent more than half of the American workforce, an up-to-date picture of trends in their pay can be a useful tool for businesses, investors, and the professionals themselves.
Starting next Monday, and then on the first Monday of every month, we will release two sets of trends. Each release will include a detailed explanation of our methodology. Here we offer a shorter version.
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The Pay Signal Index (PSI) gauges the overall direction of changes in hourly pay from month to month, much the way a purchasing managers' index measures supply chain activity. For each month, we measure the average pay offered by each business for a specific role and region. If the business offered shifts for the same role in the previous month, we record whether the average pay rose or fell.
Next we then weight this signal by the average number of shifts the business offered for that role across the two months. This is the PSI for a specific role. We also combine these weighted signals across the Census Bureau's occupational groups to produce the PSI at the national level. The PSI ranges from 0 to 100 depending on the prevalence of pay changes, with 0 implying lower pay across the board and 100 implying higher pay across the board. Here is an example for transportation and material moving, the occupational group that represents roughly 11% of the hourly workforce:
Finally, we weight these occupational PSIs by their overall representation in the hourly workforce to create a national PSI for hourly professionals, as pictured earlier in this section. At present, we have sufficient data for occupational groups that represent 44% of the hourly workforce as measured by the Bureau of Labor Statistics.
Each chart shows a dotted line at the end of the trend leading into the current month. Businesses and hourly professionals can book shifts far in advance on the Instawork platform, so we already have data on pay to be paid in the future. Only data on shifts that have already been filled are included.
In the past six months, pay increases peaked in August and December both in aggregate and in most of the occupational groups we cover. The August peak was followed by two months of widespread decreases in pay before the trend turned around again. Overall, we expect businesses to book shifts at lower rates in February than in January.
Instawork trends in hourly pay
Where the PSI provides a pulse on pay-setting decisions across occupational groups, our pay trends track changes in hourly rates for a variety of roles in different industries. For each business offering the shifts in the same role and region across consecutive months, we measure the percentage change in hourly pay. We weight these changes by the number of shifts and then create an aggregate across the United States for each role.
Our first release will include trends for 14 roles in a variety of industries. In general, we have seen the greatest increases since July 2021 in hospitality, custodial, and events. Overall, however, our data suggest that for the hourly workforce, the inflation in pay that made headlines in the past year or so happened primarily before the fall of 2021. As we reported in the newsletter of January 28, absences due to Covid-19 did lead to higher pay and more short-term bookings. However, the receding of the Omicron wave has already been accompanied by a decline in these urgent bookings, and average pay are likely to follow the same trend.
These metrics, derived from data aggregated across the Instawork platform, compare the two weeks starting 2/12/2022 to the previous two weeks. To control for the overall growth of the Instawork marketplace, only shifts involving businesses that booked shifts in both periods are included:
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