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The average reservation wage in the United States — the lowest salary Americans are willing to accept to switch jobs — has surged to a record $81,822 in March, up from $73,391 just four months earlier.
This significant jump in wage expectations, as reported by the New York Federal Reserve, hints at the growing strain between employee demands and employer capabilities.
The increase in reservation wages is most notable among specific demographic groups. According to a report published by Reuters, men, individuals over the age of 45, and those without college degrees are leading this push for higher pay.
The trends suggest a broader dissatisfaction with the current wage levels amid persistent inflation and a tight labor market that has left many feeling the pinch of higher living costs.
Interestingly, while workers are setting their sights on higher wages, employers seem to be pulling in the opposite direction. The same report from the New York Fed also shows a decrease in the average starting wage offered by employers, which fell to $73,668 in March from $79,160 in November 2023, according to Reuters. This disparity also adds to a growing gap between expectations from workers and what employers are prepared to pay, potentially leading to increased friction within the job market.
The data also suggests a decrease in workers expecting to work late into their 60’s and beyond.
According to The New York Fed’s report, “The average expected likelihood of working beyond age 62 declined to a new series low of 45.8 percent in March 2024. The average expected likelihood of working beyond age 67 also declined, to 31.2 percent.”
The data provided by the New York Fed serves as a critical indicator of the economic pressures facing both employees and employers, and it suggests workers are increasingly motivated to negotiate for higher wages. Simultaneously, the strong demand for labor gives employees additional leverage, which they appear to be using to press for better pay.
