According to a recent survey by the New York Fed's SCE Labor Market Survey, the average reservation wage in the US has reached a record high of $78,645. The reservation wage refers to the lowest salary at which a job applicant is willing to accept a new role. This figure represents an almost $6,000 increase from last year's average reservation wage. The survey, which polls approximately 1,000 people every four months, has been conducted since 2014.
Despite the slowdown in the labor market, with hiring managers finding it more challenging to fill positions, workers seem to have the upper hand. Nick Bunker, economic research director for North America at the Indeed Hiring Lab, stated that job seekers are still in control due to the high demand for workers. This suggests that companies may need to offer higher salaries to attract and retain talent.
However, it is important to note that the reservation wage is not always indicative of the salary workers actually accept. The survey found that the average full-time offer salary received by workers over the past four months was $69,475, which is lower than the average reservation wage. Nonetheless, this still represents a significant 14% increase from last year's average full-time offer salary.
The survey also revealed that workers' satisfaction with wages has improved by 3% compared to last year, and satisfaction with promotion opportunities has increased by 4%. These increases were most notable among respondents with household incomes under $60,000. Yolanda M. Owens, a career coach, suggests that workers may now have a higher threshold for switching jobs and are less interested in making lateral moves for the same amount of money.
Overall, the survey results indicate that workers' expectations for salaries have risen, potentially due to the increased demand for workers and the challenges faced by companies in recovering from the pandemic. While the reservation wage may not always align with the salary workers ultimately accept, it does suggest that companies may need to offer more competitive compensation packages to attract and retain talent in the current job market.