Starting Salary Demands Soar: Workers Now Seeking Nearly $80K for New Jobs
The lowest wage American workers are willing to accept for a new job hit a record high this year, according to a Federal Reserve Bank of New York survey published Monday.
The average “reservation wage,” or the minimum acceptable salary offer required for workers to switch jobs, hit $78,645 during the second quarter of 2023, according to the Fed’s latest survey of consumer expectations.
This represents a nearly 8% increase over the same time last year when the average reservation wage was around $72,873.
The year-over-year increase was greatest among workers aged 45 and older.
Workers with a bachelor’s degree now expect an annual salary of $98,600 to accept a new position, whereas those without a degree indicated they would not accept a salary lower than $63,300.
Workers have been able to quit their jobs in favor of better wages, working conditions, and hours due to the extremely tight labor market, a phenomenon known as the “Great Resignation.”
This month, the Labor Department reported that the economy had 9.6 million open positions at the end of June, which equates to approximately 1.6 posted jobs for every unemployed worker.
For many Americans, switching jobs has proven to be a profitable move.
Workers who changed jobs in June received a 7% annual pay raise, compared to a 5.5% pay raise for those who stayed in the same position, according to recent data published by the Federal Reserve Bank of Atlanta.
Those without a college diploma said they would not accept a salary less than $63,300.
However, rapid wage growth has been a major driver of high inflation over the last two years.
Labor Market Dynamics and Inflation Concerns
The Federal Reserve has repeatedly continued to caution about the possibility of a wage-price spiral, with Chairman Jerome Powell speaking about the risks of substantial pay increases.
“I think many, many analysts believe that it will be an important part of getting inflation down, especially in the non-housing sector, to getting wage inflation back to a level that is sustainable, that is consistent with 2% inflation,” Powell told reporters in June.
A wage-price spiral occurs when prices rise, and workers demand increased compensation to keep up.
This, in turn, can increase inflation as companies seek to offset the higher labor costs.
Despite this, there are indications that the labor market is beginning to cool due to rising interest rates.
Employers added 187,000 jobs in July, the fewest in two years, as labor demand declines.
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Source: NEW YORK POST
