American workers are demanding almost $80,000 a year to take a new job
The amount of money most workers want now to accept a job reached a record high this year, a sign that inflation is alive and well at least in the labor market.
According to the latest New York Federal Reserve employment survey released Monday, the average “reservation wage,” or the minimum acceptable salary offer to switch jobs, rose to $78,645 during the second quarter of 2023.
That’s an increase of about 8% from just a year ago and is the highest level ever in a data series that goes back to the beginning of 2014. Over the past three years, which entails the Covid era, the level has risen more than 22%. The number is significant in that wages increasingly have been recognized as a driving force in inflation. While goods prices have abated since pushing overall inflation to its highest level in more than 40 years in mid-2022, other factors continue to keep it well above the Fed’s targeted rate of 2%.
The New York Fed data is consistent with an Atlanta Fed tracker, which shows wages overall rising at a 6% annual rate but job switchers seeing 7% gains.
Employers have been trying to keep pace with the wage demands, pushing the average full-time offer up to $69,475, a 14% surge in the past year. The actual expected annual salary rose to $67,416, a gain of more than $7,000 from a year ago and also a new high.
Though there was a gap between the wage workers wanted and what was offered, satisfaction with compensation and upward mobility increased across the board.
With markets on edge over what the Fed’s next policy step will be, more signs of a tight labor market raise the likelihood that policymakers will keep interest rates higher for longer. At their July meeting, officials noted that wages “were still rising at rates above levels assessed to be consistent with the sustained achievement” of the 2% inflation goal, minutes from the meeting said.
Monday’s survey results also showed some other mixed patterns in the labor market.
Job seekers, or those who have looked for work in the previous four weeks, declined to 19.4% from 24.7% a year ago. That came as job openings fell by 738,000 to 9.58 million, according to the Bureau of Labor Statistics. The likelihood of switching jobs fell, dropping to 10.6% from 11% a year ago, while expectations of being offered a new job also declined, to 18.7% from 21.1%.
My wife and I average $69k/year each and we're doing...just okay-ish. We can pay our mortgage (bought 12 years ago, couldn't afford our house if we bought it today), one nice 5 year-old car, some student loan debt, bills, some entertainment and eating out occasionally, some tech like tablets and phones so they aren't over five years old. But we can't pay for house repairs, a major card breakdown/repair, or any vacation that is more than a day's drive away. We can probably restructure our finances to do be a little better off, but for the life of me, I don't know how family that is making less than $80k gets by, let alone $30k, or even less.
There are a lot of optimizations you can do. For example, when I didn't make a lot of money, all of my entertainment was free. My credit card points would fly me to a cheap location like South East Asia where the prices are actually lower.
I also got bank bonuses although that was more relevant when my bank wasn't paying me 5% for just keeping the money there.
My stocks also pay me dividends, and I saved enough for the majority of them to be in a taxable account.
How much money did you have in the bank to justify the bank paying bonuses? How’d you get the money to buy stocks?
You only need $15,000 for the bonuses
I got money to buy stocks when I worked and lived with my dad. Of course, not everyone has this option, but not everyone lives in SF bay area so the expenses can be low in other places
Honey, most people never have $15k in the bank at any point in their lives. Congratulations, you are a lucky kid who makes good money!
People who have $138K household income do, who is the person I replied to
Talk about being out of touch.
Well, you see, the secret to being frugal with your money is to have enough money to just live of the interest and the dividends! Stupid poor people, just optimize your money by having more of it and you're all set!
The person I'm replying to makes $69K
In what world is he poor?
How are they out of touch when they're giving advice to someone bringing home $140k a year? These are some solid strategies for maximizing your earnings when you have that kind of income but find yourself just doing okay budget wise.
My income was exactly $70,000 before tax, basically the same as the person I'm replying to