Workers in the US now want at least $76,000 to start a new job as minimum wage expectations continue to rise in a red-hot job market
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- 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.
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.
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