In a notable economic trend, Americans' salary expectations for new job positions have surged to the highest point since March 2014, a benchmark set by the New York
Federal Reserve when they began tracking this data.
The threshold for the lowest annual wage respondents are willing to consider for a new job has continued to rise significantly. Reaching an impressive $78,645, this figure has ascended from $72,873 in July 2022 and a mere $62,194 in July 2019, prior to the onset of the COVID-19 pandemic. Notably, this year-over-year increase has been particularly pronounced among respondents aged 45 and older. Among the gender breakdown, men expressed an average desired wage of $91,048, while women aimed for $66,068.
Wage dynamics have become a focal point in the Federal Reserve's efforts to manage inflation. In June, Fed Chairman Jerome Powell emphasized the importance of curbing wage-driven inflation as a key step toward achieving the central bank's 2% inflation target. The consumer price index for July was recorded at 3.2%, up from June's 3%.
However, a disparity exists between the desired wage of $78,645 for job-switchers and the average actual wage of $69,475 over the past four months, as revealed by the New York Fed. Despite this difference, employees are clearly performing better compared to the $60,764 average wage they earned a year prior.
The relationship between wage growth and inflation is intricate. As businesses' costs increase due to higher wages, they often adjust prices upward. In response, workers demand higher wages to maintain their purchasing power. This interplay is known as the "wage-price spiral." Nonetheless, the aim is not to stifle wage growth entirely. Powell stated that wages will continue to rise, but the objective is to ensure that wage increases align with a sustainable 2% inflation rate over time.
However, achieving this balance is still a work in progress. The Atlanta Fed's wage growth tracker showed a 5.7% growth rate in July, a slight increase from June. Job changers experienced a 6.4% tracker rate, up from 6.1% in June, while those who remained in their jobs saw a 5.4% rate, consistent with the previous month.
Efforts to manage wage growth can include cooling down the labor market, as indicated by data from the New York Fed. The percentage of individuals actively seeking jobs in the past four weeks declined from 24.7% to 19.4% year-over-year, and the likelihood of switching jobs dropped from 11% to 10.6%. Furthermore, expectations of receiving job offers decreased from 21.1% to 18.7%, and the anticipated likelihood of multiple job offers in the next four months fell from 25.7% to 20.6%.
Interestingly, a rising number of respondents (3.9%) anticipate unemployment, marking an increase from 2.3% in July 2022, and the highest level since March 2020. These developments suggest ongoing fluctuations in the job market, prompting both workers and policymakers to carefully navigate this complex economic landscape.