The results of the New York Fed’s latest SCE labor market survey, fielded quarterly since 2014, found that the lowest offer U.S. workers would be willing to take for a new job hit a high of over $75,000 annually in March. The data suggests that workers’ price tags are increasing along with the rising cost of living — and the newfound bargaining power they’re finding in the workforce.
What the data says
The average reservation wage, or the lowest offer workers would accept to start a new job, clocked in at $75,811 a year. That’s $2,144 more than November 2022’s average reservation wage.
- It's also the highest recorded by the New York Fed, which wrote in a report that the increase was driven primarily by respondents over 45 and those who have at least a college degree.
- Survey data shows the average reservation wage for men (who required a roughly $88,900 minimum) was much higher than that of women (roughly $63,100) — a $3,200 and $1,400 increase from November, respectively.
- The average reservation wage for people without a college degree was significantly lower than those with a degree. Workers without a degree expected $59,700 annually, while people with a degree demanded $97,300.
That's what workers wanted to be paid, though. The average full-time offer actually received increased from $59,834 in November to $62,088.
- Employees are keeping their options open: The expected likelihood of a worker changing employers in the next four months increased from 10.7% to 12.5%.
Why it’s important
Even as inflation cools, the cost of living is still much higher than both the Federal Reserve (and U.S. workers) would hope. As a result, it’s not surprising that overall, workers’ pay expectations keep increasing — data shows inflation has been outpacing wage growth, even though the U.S. Bureau of Labor Statistics says average hourly earnings increased 0.5% from March 2022 to March 2023.
But that’s likely not the only reason workers have high pay expectations.
Though the labor market isn’t as tight as last year, unemployment remains low — it hit 3.5% in March. Companies are still struggling to retain talent. New pay transparency laws that went into effect this year several states and major metropolitan areas, including New York City, have also forced many companies to make more attractive offers, giving workers yet another advantage.