Employees' wage expectations have risen to $76,000 a year, according to a New York Fed survey.
The lowest wage that someone would accept for a new role is almost $2,100 higher than it was in November.
The rise in expected salary levels comes at a time of historically low unemployment rates in America.
American employers may need to fork out even bigger bucks to lure in workers.
Employees' wage expectations have risen to a new high of $75,811 a year, according to the New York Fed's SCE Labor Market Survey in March.
The reservation wage, or the lowest wage that someone would accept for a new role, is almost $2,100 higher than it was in November when the survey was last conducted, at which point the wage was $73,667. The survey asked respondents about the lowest wage or salary they would accept before taxes and other deductions if they were offered a job today in their line of work that they would consider.
Related video: Bill to accelerate minimum wage moving forward without tying it to indexingDuration 1:44 View on Watch
The Fed's survey shows that men, in particular, upped their wage expectations by around 4% to $88,883, whereas women upped their minimum ask by just over 2% to $63,069. Those with a college degree raised their reservation wage expectations by about $5,000 to over $97,000. However, those with less than a college degree have reduced their expectations by about $160 to about $59,700 since November, per the survey.
To contextualize these expectations, the average American household earns a median income of under $70,000 a year, according to a March 8 report by financial technology company SmartAsset. The median household income was around $71,000 in 2021, per the United States Census Bureau, not significantly changed from 2020.
The rise in expected salary levels makes sense, as it comes at a time of historically low unemployment rates in America. And while there are some signs of cooling, it continues to be a red-hot workers' market. Civilian unemployment rates were at 3.5% in March, a touch higher than the 3.4% recorded in February, according to the US Bureau of Labor Statistics. From 2003 to 2023, unemployment levels have been at that level only a handful of times — including the first quarter of 2020, which coincided with the outbreak of the COVID-19 pandemic, per the bureau.
And while this may be great for job-seekers, the US Federal Reserve has another problem — persistently high inflation. The Fed has been trying to cool inflation below its current 5% year-on-year rate to a 2% target, as higher wages could fuel inflation further.
The central bank is trying to solve this cyclical problem, where employers — who face higher labor charges — are trying to recoup their costs by increasing the cost of goods and services. This, in turn, leads to employees upping their salary expectations to combat inflation's erosive effects.
No comments:
Post a Comment