In the current labor market, employees have a significant advantage as they are being offered higher salaries. According to the Survey of Consumer Expectations released by the Federal Reserve Bank of New York on Monday, job candidates have received an average full-time offer of $69,475 per year over the past four months. This figure represents a substantial increase of $9,000 from the previous year when the average offer stood at $60,764.
Decrease in Job Offers
While there has been a rise in salary offers, the percentage of job seekers who have received at least one offer has decreased slightly. In the same four-month period, 19.5% of job seekers reported receiving an offer, compared to 21.1% during the previous year.
Increasing Salary Expectations
Not only are job candidates receiving higher offers, but they are also expecting higher salaries. The survey found that job seekers in July expected an annual salary of $67,416 over the next four months. This is a significant increase from the previous year when the expectation was $60,310. It is worth noting that workers above the age of 45 and college graduates anticipated a larger increase in salary offers compared to other age groups and education levels.
The Average Reservation Wage
The concept of the average reservation wage refers to the minimum wage respondents are willing to accept for a new job. In this survey, the average reservation wage reached $78,645, which marks the highest reading since the series began. This represents an increase from $72,873 in July 2022. Respondents above the age of 45 experienced the most pronounced annual increase in their reservation wage.
Job Search Trends
The proportion of individuals actively searching for a job in the past four weeks has decreased as well. In July 2022, 24.7% of respondents reported searching for a job, compared to 19.4% in the latest survey.
These findings highlight the strong position that employees currently hold in the labor market. With higher offers and increased salary expectations, job seekers have leverage in their negotiations and can aim for higher wages.
A More Challenging Job Market for Younger Workers
The current job market is posing increased challenges for younger workers. Compared to the previous year, fewer individuals are actively seeking new employment while more people are expressing concerns about potential unemployment. In July, the percentage of individuals who reported job searching within the past four weeks dropped to 19.4% from 24.7%. This decline was primarily observed among workers under 45 years old, job seekers without a college degree, and those earning less than $60,000 annually.
Furthermore, younger and lower-paid workers are particularly worried about the risk of unemployment within the next four months. For individuals under 45, the percentage expecting to become unemployed rose to 5.5% from 2.3% compared to the previous year. Overall, the average expected likelihood of becoming unemployed for all workers increased to 3.9%, which is the highest it has been since March 2020, coinciding with the onset of the COVID-19 pandemic.
Recent government data released this month reveals that the U.S. added 187,000 jobs in July; however, hiring momentum has started to slow down. Despite economists considering it a robust job market with employers struggling to find suitable candidates, entry-level hiring has declined across various industries. Additionally, according to the latest government data, the U.S. unemployment rate slightly decreased from 3.6% in June to 3.5% in July.