COMP NEWS – Workers average reservation wage has hit a new high, signifying that employees are prepared to continue demanding higher compensation and benefits for their labor.
Employers might be eying smaller raises than they have in the past couple of years, but don’t tell that to employees: Job seekers are expecting record-high offers.
Workers’ average reservation wage—the lowest salary employees say they would take for a new job—has risen to $78,645, according to new data out from the Federal Reserve Bank of New York. That’s an 8 percent jump from July 2022’s measure of $72,873 and the highest reading ever measured by the bank.
Salary expectations are even higher among workers with a college degree—their reservation wage now sits at nearly six figures at $98,600—compared with an average of $63,300 for those who don’t have a degree, according to the bank’s Survey of Consumer Expectations Labor Market Survey. Men have higher pay expectations than women—the average reservation wage for men is $91,048, compared with just $66,068 for women.
The survey results indicate that employers might have to keep up with wages to satisfy confident employees and job seekers, even as many of them consider tightening their purse strings a bit next year, said Lexi Clarke, chief people officer at Payscale, a Seattle-based compensation software firm.
The demand for higher wages is spurred by a myriad of reasons related to both shifting employee values and a tight labor market.
The demand for higher wages comes as high inflation, evolving employee priorities and a tight labor market have pushed employees to demand higher salaries from their employers. That’s especially true for workers who switch jobs, as it often allows them a bigger payday. According to data from the Federal Reserve Bank of Atlanta, as of July, the typical job switcher earned 6.4 percent more than they had 12 months before, compared to those who stayed with their employer and saw annual raises of 5.7 percent.
Meanwhile, a massive survey of more than 32,000 workers this spring from the ADP Research Institute found that an overwhelming majority of workers expect a bigger payday from their employers, and they may be ready to go to another job if they don’t get it.
“While there is worker confidence that their current employers will in fact raise their pay, many workers also believe they’ll be able to get that pay raise elsewhere if not from their current employer,” Nela Richardson, ADP’s chief economist, told SHRM Online in April.
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