Salary expectations for U.S. workers have reached a record high, according to the New York Federal Reserve’s annual employment and labor market survey.
The average “reservation wage” (the minimum an individual would accept for a new job) rose to $78,645 in July 2023, up from $72,873 for the same period last year.
The uptick in salary expectations was most pronounced in those over 45, who on average had reservation wages of $80,239, while those under 45 had expectations of $77,077.
However, Julia Pollak, chief economist at ZipRecruiter, told Entrepreneur that the report also showed that an increase in reservation wage may signal lingering effects of post-pandemic wage expectations, and salaries not keeping up with the inflation rate.
“Anytime there’s rapid growth, workers begin to expect that to continue,” Pollak says. “Workers may also be expecting to see the kind of growth they saw during the pandemic persist. The consumer price index has gone up so much, and wages have also risen about the same amount, whereas they should have risen faster by now, so workers are expecting some sort of catch-up in wages.”
While the job market was in seekers’ favor for the majority of 2022, the tables have turned, and American workers are less certain about their ability to receive offers in the coming months, the new report also found.
Individuals expecting to receive a job offer in the next four months dropped to 18.7% in July 2023, down from 21.1% in July 2022. Furthermore, expectations of receiving multiple offers fell more significantly, from 25.7% in July of last year to 20.6% in July 2023.
Still, the decline in confidence is relatively minor, Pollak says, and may simply reflect the job market returning to healthy norms following the post-pandemic hiring frenzy.
“Numbers have come down from such a high, and from record high hires and record high job openings and everything, that it does mean that some of the people who got a career boost are now struggling and finding it harder to find jobs,” Pollak said. “In a healthier labor market, there will always be winners and losers. There will be more people who are finding it challenging, and that is sort of to be expected.”
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While the number of Americans searching for new jobs decreased by 5.3% in July from a year prior, satisfaction with wage compensation rose by 3%, along with nonwage benefits (1.7%), and promotion opportunities (4%).
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