Inflation has driven wage expectations higher according to new data from the Federal Reserve Bank of New York.
In November, Americans were shown to expect a minimum of $73,667 for a new job, most prominently seen among professionals under the age of 45 and an increase from $72,873 seen in July.
Additionally, the New York Fed’s Microeconomic SCE Labor Market Survey revealed that the average annual salary expectation grew from $60,310 in July to $61,187 last month — an unsurprising trend given the nature of today’s economic standing and predictions about a future recession.
Despite the Fed’s interest rate hikes making moves to cool inflation, consumers are still eager for higher wages in order to regain purchasing power. However, this could lead to the unwanted wage-price spiral, in which wages grow due to price increases, and prices increase due to higher wages.
Recent unionization efforts have also brought the idea of higher wages to the forefront of conversation, with many union workers successfully negotiating increased salaries.
Companies may try to meet these expectations halfway by offering one-time bonuses — a chance to buy time and a gesture that acknowledges the struggles of high inflation in recent years.
“[We] believe you need to see a better balancing of supply and demand in the labor market so that you have — it’s not that we don’t want wage increases,” said Fed Chair Jerome Powell.
“We want strong wage increases. We just want them to be at a level that’s consistent with 2 percent inflation….if you factor in productivity estimates, standard productivity estimates, wages are running, you know, well above what would be consistent with 2 percent inflation.”