American workers want almost US$79,000 salary to start a new job

THE wage floor for American workers climbed to a record high close to US$79,000, according to a Federal Reserve Bank of New York survey released on Monday (Aug 21) that also found pay demands among women are rising twice as fast as for men.

The average reservation wage – the lowest annual pay that workers would accept to take a new job – increased to US$78,645 in July, according to the New York Fed’s most recent Survey of Consumer Expectations. That’s up from about US$72,900 a year earlier and US$69,000 in July 2021.

Pay expectations among women in the labour force rose 11 per cent in the past year, twice as fast as for men, the survey found. Still, there’s a substantial gender gap when it comes to what’s an acceptable salary. For men the average reservation wage was about US$91,000 – and for women it was US$25,000 lower than that.

Workers with a college degree now expect US$98,600 annually to accept a new job, compared with an average US$63,300 for those who don’t have one.

For comparison, the median US household income was US$70,784 in 2021, according to the US Census Bureau. Data for 2022 will be released next month.

The new high in the reservation wage comes as American employers added 187,000 jobs last month, following a similar increase in June. The unemployment rate, at 3.5 per cent, is close to the lowest level in decades and average hourly earnings were up 4.4 per cent in June from a year earlier.

Earlier retirement?

Still, there are signs that the labour market is slowing. The Fed survey found that the average expected likelihood of receiving multiple job offers in the next four months declined to 20.6 per cent from 25.7 per cent a year earlier.

One piece of bad news for employers in the Fed data is that US workers increasingly see the prospect of earlier retirements – suggesting the pool of available labour could shrink.

The average expected likelihood of working beyond age 62 declined to 47.7 per cent from 48.8 per cent in July 2022, the lowest reading since the start of the series in March 2014 and down by more than a percentage point over the past year. The figure has been declining since Covid hit.

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Those data could suggest that older people see the labour market as unappealing, or that the pandemic made more of them think about retirement.

The reservation wage for people whose household income is below US$60,000 peaked one year after Covid-19 was declared a pandemic, at about US$50,800, and has fallen by more than US$3,000 since then – while the figure for higher earners continued to rise. BLOOMBERG