Crain’s Detroit Business and Bloomberg
Aug. 23, 2022
The average reservation wage, or the lowest pay level that Americans would be willing to accept for a new job, rose by 5.7% from a year earlier to $72,873 in July, according to the latest labor-market survey by the Federal Reserve Bank of New York, as soaring prices change the calculus for workers.
The self-reported reservation wage has climbed faster among men and younger workers since the pandemic began, according to the New York Fed’s survey, which is conducted three times a year. The overall figure was down slightly from a series high of $73,283 in the last study in March.
Inflation at close to four-decade highs has eaten into the purchasing power of US employees, and most of them have seen a decline in real incomes over the past year. While job openings have dropped from record levels , there were still 10.7 million positions available in June, allowing workers some bargaining power. A record 22 states reported jobless rates at or below 3% in July, an indication of how tight labor markets have become.
The reservation wage reported by Americans with less than college degree, and those age 45 or younger, has risen by more than 23% since March 2020 when the pandemic began, according to the New York Fed.
The latest survey showed a widening split by gender. The reservation wage for men jumped to $86,259, while for women it declined to $59,543.
The new survey showed plenty of job-search activity, with 21.1% of respondents reporting that they received at least one job offer in the past four months, up from 18.7% a year earlier. It also found signs that Americans see their working lives getting shorter. The expected likelihood of working beyond age 62 dropped to 48.8%, from 50.1% a year earlier, extending a downward trend that began in 2020.