New Job Applicants Demand an Annual Salary of Nearly $80,000, Say American Workers

The current job market is experiencing a new record as workers are demanding a higher salary to accept a position. This surge in desired wages reflects the persistence of inflation, particularly within the labor market.

According to the most recent employment survey conducted by the New York Federal Reserve, the average “reservation wage,” which is the minimum salary offer workers are willing to accept when switching jobs, has risen to $78,645 in the second quarter of 2023. This represents an 8% increase compared to last year and marks the highest level observed since data collection began in 2014. Over the course of the last three years, during the Covid-19 pandemic era, the reservation wage has seen a remarkable increase of more than 22%.

These findings are significant as wage levels have been identified as a key driver of inflation. While the prices of goods have somewhat stabilized since peaking in mid-2022, various factors continue to contribute to inflation rates exceeding the Federal Reserve’s target of 2%.

The data from the New York Fed aligns with findings from an Atlanta Fed tracker, which indicates a 6% annual increase in wages overall, with job changers experiencing even greater gains of 7%.

In response to escalating wage demands, employers have been striving to keep up by raising their average full-time offers to $69,475, representing a 14% surge over the past year. Furthermore, the expected annual salary has risen to $67,416, an increase of over $7,000 from the previous year and an all-time high.

Although a gap persists between the desired wages of workers and the salaries offered, overall job satisfaction and prospects for upward mobility have shown improvement.

Considering the uncertainties surrounding the Federal Reserve’s future policy actions, signs of a tight labor market increase the likelihood of maintaining higher interest rates for an extended period. Minutes from the July meeting of Fed officials revealed that wages were still rising at rates higher than anticipated for achieving the 2% inflation target.

The survey results released on Monday also highlighted some mixed patterns within the labor market. The percentage of job seekers, individuals actively looking for work within the previous four weeks, has decreased from 24.7% to 19.4% compared to the previous year. Meanwhile, job openings have declined by 738,000, reaching 9.58 million according to the U.S. Bureau of Labor Statistics.

The likelihood of changing jobs has also decreased from 11% to 10.6% compared to the previous year, and expectations of receiving job offers have similarly declined from 21.1% to 18.7%.