The wage floor for American workers climbed to a record high close to $79,000, according to a Federal Reserve Bank of New York survey released Monday 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 $78,645 in July, according to the New York Fed’s most recent Survey of Consumer Expectations. That’s up from about $72,900 a year earlier and $69,000 in July 2021.
Pay expectations among women in the labor force rose 11% 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 $91,000 — and for women it was $25,000 lower than that.
Workers with a college degree now expect $98,600 annually to accept a new job, compared with an average $63,300 for those who don’t have one.
For comparison, the median US household income was $70,784 in 2021, according to the U.S. 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%, is close to the lowest level in decades and average hourly earnings were up 4.4% in June from a year earlier.
Earlier Retirement?
Still, there are signs that the labor 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% from 25.7% 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 labor could shrink.
The average expected likelihood of working beyond age 62 declined to 47.7% from 48.8% 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.
Those data could suggest that older people see the labor market as unappealing, or that the pandemic made more of them think about retirement.
The reservation wage for people whose household income is below $60,000 peaked one year after Covid-19 was declared a pandemic, at about $50,800, and has fallen by more than $3,000 since then — while the figure for higher earners continued to rise.