Commuters arrive at Oculus Station and Mall in Manhattan, New York on November 17, 2022.
Spencer Platt | Getty Images
The amount of money most workers are now willing to accept for a job reached a record high this year, a sign that inflation is alive and well at least in the labor market.
The average “reservation wage,” or the minimum acceptable salary offer to change jobs, rose to $78,645 in the second quarter of 2023, according to the New York Federal Reserve’s latest employment survey released Monday.
That’s an increase of about 8% from just a year ago and is the highest level ever in a data series dating back to early 2014. In the past three years, which have brought with them the era of the Covid-19 pandemic , the level has risen by more than 22%.
This number is significant because wages are increasingly recognized as a driver of inflation. While commodity prices have fallen since pushing headline inflation to the highest level in more than four decades in mid-2022, other factors continue to keep inflation well above the Fed’s target rate of 2%.
The New York Fed data is consistent with an Atlanta Fed tracker, which shows that wages overall are rising 6% annually, but job changers are seeing a 7% increase.
Employers have tried to keep pace with wage demands, pushing the average full-time offer to $69,475, up 14% in the past year. Actual expected annual salary rose to $67,416, a gain of more than $7,000 from a year ago and also a new high.
Although there was a gap between what wage workers demanded and what was offered, satisfaction with compensation and upward mobility increased across the board.
As markets worry about what the Fed’s next policy move will be, increasing signs of a tight labor market increase the likelihood that policymakers will keep rates high for longer. At their meeting in July, officials noted that wages “continued to rise at rates above levels considered consistent with the sustainable achievement” of the 2% inflation target, minutes of the meeting show.
Monday’s survey results also showed some other mixed patterns in the labor market.
The number of job seekers, or those who have looked for work in the past four weeks, fell to 19.4% from 24.7% a year ago. That was because the number of job openings fell by 738,000 to 9.58 million, according to the U.S. Bureau of Labor Statistics.
The likelihood of changing jobs fell from 11% a year ago to 10.6%, while expectations of getting a new job also fell, from 21.1% to 18.7%.