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- The reservation wage is the lowest salary at which a job applicant will accept a new role.
- A recent survey found that the average reservation wage has risen to nearly $80,000.
- That's a record high — and shows that while the job market has slowed, workers may still have the upper hand.
Hiring managers beware: It may cost more than ever to get a candidate to accept a position.
Even though the labor market has slowed, the lowest salary the average US worker says they'd need to accept a new job has reached record highs, according to New York Fed's SCE Labor Market Survey.
The results, which reflect the responses of 1,000 people nationwide, show that the average reservation wage — the lowest wage at which someone would accept a new job — was $78,645 as of July. That's an almost $6,000 jump from the average reservation wage reported in July 2022. It's also the highest reservation wage the survey has reported since launching in 2014. (The survey polls approximately 1,000 people every four months on questions related to their current or most recent job.)
"Demand for workers – whether new ones or existing ones – remains high, and job seekers are still in the driver's seat," Nick Bunker, economic research director for North America at the Indeed Hiring Lab, said earlier this month.
Of course, the reservation wage refers to what workers say their minimum acceptable salary is, and in practice, they may take a job with a lower wage. In fact, the survey found that the average full-time offer salary that workers have received over the past four months was $69,475.
Still, that's a 14% increase from the average full-time offer salary workers received last July. Meanwhile, the Consumer Price Index only climbed 3.2% between July 2022 and 2023, meaning new offers appear to be outpacing inflation.
The survey found that satisfaction with wages has improved 3% since last year, while satisfaction with promotion opportunities increased by 4% over that time. The year-over-year increases were most pronounced among respondents with household incomes under $60,000.
Yolanda M. Owens, a career coach who works with workplace sites like The Muse, said that workers' threshold for switching jobs might be higher because they are less interested in making lateral moves.
"Before people were willing to make a lateral move for the same amount of money," she told Insider.
But between the spate of companies laying off workers over the past year and companies racing to recover their pandemic losses, she's observed that people have become busier than ever in their current roles — and less likely to job hop.
"They realize now the work is going to be challenging regardless of where they want to be, so they might be compensated for it," she said.