U.S. workers are demanding higher salaries in light of the red-hot job market. According to the New York Federal Reserve’s SCE Labor Market Survey conducted in March, the average reservation wage – the minimum salary people would accept to take on a job – is now set at $76,000 a year, up almost $3,100 since the November survey when the wage stood at $73,667.
Men have risen their expectations by around 4%, which puts the minimum salary they would accept at $88,883, while women only increased their expectations by 2% and would now expect to earn a minimum of $63,069 for a job. Those with a college degree would expect to start at least $97,000, as their expectations have risen by $5,000 since last November. In contrast, those without any college degree have lowered their expectations by $160, now expecting around $59,700 for a job.
This sharp increase of reservation wages is in contrast to the median household income in America, which stands at $70,000 according to the report by financial technology company SmartAsset. This shows that it has been hard to keep up with inflation and the incredibly low unemployment rates of 3.5% according to the U.S. Bureau of Labor Statistics. This is an important issue as employers are now pushing to increase the cost of goods and services to recuperate the costs imposed by high labor charges.
The U.S. Federal Reserve is concerned as continuous increases in wages could further fuel high inflation, and has long been trying to bring it under the 2% target. This is a serious cyclical problem as it would lead workers to expect even higher salaries, which could take the inflation rate even higher.
The US Federal Reserve is an independent central bank responsible for setting interest rates, controlling inflation, and supervising the banking industry in the U.S. The current chair of the Federal Reserve, Jerome H. Powell, was appointed by former President Donald Trump in 2018 and is widely respected for his knowledge and his commitment to detecting and preventing financial risk. His expertise and careful handling of the economy during the COVID-19 pandemic has won him the admiration of the public for his diligent work.
