Americans’ salary expectations for a new job rose in July to the highest level since March 2014, when the New York Federal Reserve started tracking this data.
The lowest annual wage respondents would be willing to accept for a new job continued to rise, reaching $78,645, from $72,873 in July 2022 and $62,194 in July 2019 before the COVID-19 pandemic, the New York Fed said. The year-over-year increase was most pronounced for respondents older than 45, and men wanted on average $91,048 compared with women who wanted $66,068.
Wages have been a focal point in the Fed’s fight against inflation. In June, Fed Chairman Jerome Powell said taming wage inflation was an important part of getting inflation down to the central bank’s 2% goal. July’s consumer price index was 3.2%, up from 3% in June.
What salary do workers actually earn?
There’s definitely a gap between the $78,645 a year that people want to get paid to switch jobs and the average $69,475 people received over the past four months, the New York Fed said. Despite the difference, employees were doing much better than the average $60,764 they earned a year ago.
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How does wage growth fuel inflation?
If businesses’ expenses grow with higher wages, they’ll often raise prices to accommodate that. As prices rise, workers will demand higher wages to help them keep up spending. This cycle is what economists call the “wage-price spiral.”
That’s not to say wages should stop rising.
“Wages will continue to increase,” Powell said. “What we’re talking about is having wage increases still at a very strong level but at a level that’s consistent with 2% inflation over time.”
Powell didn’t specify what level would be consistent with the Fed’s inflation goal, but we’re apparently not there yet.
The Atlanta Fed’s wage growth tracker was 5.7% in July, up one-tenth from June. For people who changed jobs, the tracker in July was 6.4%, up from 6.1% in June. For those not changing jobs, the tracker was 5.4%, flat from June.
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How can the Fed cool wages?
One way to do that is to cool the labor market, which the New York Fed data shows might be happening.
The share of job seekers in the previous four weeks declined to 19.4% from 24.7% a year ago, and the likelihood of switching jobs fell to 10.6% from 11%, the survey said.
Expectations of being offered a new job declined to 18.7% from 21.1% a year ago, and the average expected likelihood of receiving multiple job offers in the next four months dropped to 20.6% from 25.7%, the New York Fed said.
Additionally, 3.9% of respondents expect to be unemployed, up from 2.3% in July 2022 and the highest level since March 2020, data showed.
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at[email protected] and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday.
