American workers want nearly $80,000 a year to take a new job
Passengers arrive at the Oculus station and center in Manhattan, New York, November 17, 2022.
Spencer Platt | Getty Images
The amount of money that most workers are now willing to accept for work reached its highest level this year, a sign that inflation is alive and well at least in the labor market.
According to the New York Federal Reserve’s employment survey released Monday, the “reservation wage,” or minimum wage offer to change jobs, rose to $78,645 in the second quarter of 2023.
That’s an increase of about 8% from just a year ago and is the highest ever in a data series that goes back to the beginning of 2014. Over the past three years, which including during the Covid-19 pandemic, the rate has increased by more than 22%.
This number is important because increasing wages have been recognized as a driver of inflation. While commodity prices have slowed from pushing headline inflation to its highest level in more than 40 years by mid-2022, other factors continue to keep it well above the Fed’s target rate of 2%.
The New York Fed data is consistent with the Atlanta Fed controller, which shows total wages rising at an annual rate of 6% but job seekers seeing 7% gains.
Employers have been trying to keep up with wage demands, pushing the average full-time offer up to $69,475, an increase of 14% in the past year. The expected actual annual salary rose to $67,416, a gain of more than $7,000 from a year ago and also a new high.
Although there was a gap between the wages workers wanted and what was being offered, satisfaction with compensation and upward mobility in general increased.
With markets on edge over the Fed’s next policy move, more signs of a tight labor market increase the likelihood that policymakers will keep interest rates higher for longer. At their meeting in July, officials noted that wages “were still rising at levels above levels assessed to be consistent with the sustained achievement” of the 2% inflation target, according to a summary minutes of the meeting.
Monday’s survey results showed some other mixed patterns in the labor market.
Jobseekers, or those who have looked for work in the previous four weeks, decreased to 19.4% from 24.7% a year ago. That came as job openings fell by 738,000 to 9.58 million, according to the US Bureau of Labor Statistics.
The likelihood of changing jobs fell, falling to 10.6% from 11% a year ago, while expectations of a new job also declined, falling to 18.7% from 21.1%.