• The lowest salary the average American would accept to start a new job is at a new high.
  • That's according to average reservation wage results from the New York Fed's SCE Labor Market Survey.
  • The average reservation wage in November 2022 was $73,667, 4.7% higher than the average a year earlier.

If you're looking to hire someone new, it'll cost you.

Prices are soaring, the labor market is still hot, and some small businesses are having a hard time filling openings.

In the current economic and labor market situation, with a potential recession on the horizon, people say it'll take even more to get them into a new role. The average minimum price tag to lure them: nearly $74,000.

That's according to the New York Fed's SCE Labor Market Survey, based on reservation wages, or the lowest wage that someone would accept for a new role. The survey asked respondents: "Suppose someone offered you a job today in a line of work that you would consider. What is the lowest wage or salary you would accept (BEFORE taxes and other deductions) for this job?"

The average answer, according to respondents, is $73,667 in November 2022. A new New York Fed blog post about the latest results finds that the almost $74,000 average is actually a series high based on figures not adjusted for inflation starting in March 2014.

For both people who are employed and those who are not, the average reservation wage has been on the upswing since late 2017, according to the blog post — and "more so since the onset of the pandemic." The average reservation wage from March 2020 to November 2022 climbed more for employed people, compared to peers who aren't working. But even those unemployed or not in the labor force saw reservation wages go up by about 12%, compared to 19.4% for currently employed respondents.

Overall, the survey results show the average reservation wage has increased from the same time a year ago, with a 4.7% increase from November 2021 to November 2022 based on figures not adjusted for inflation.

Workers were also more confident throughout 2022 that their current employers would make a counter offer that matches an offer, showing that they know employers are eager to hang onto them.

Those expectations are still higher than the offers that people have coming in, where wages have cooled a bit since March. According to the results from the Survey of Consumer Expectations, the mean job offer wage among survey respondents who were offered a new full-time role was $59,834 in November 2022, a touch below $60,764 in July and over $4,000 below the average offer of $64,104 in March.

Even so, full-time workers were making a mean of $80,213 in November, showing that workers' expectations for offers were well within the realm of actual earnings.

Certain respondents also said that they'd accept wages below or above that $73,667 average. For instance, the lowest wage that women would accept was well below $74,000, and about $24,000 less than what men would accept. Female respondents' reservation wage was $61,645, while men would accept no less than $85,698.

But even with those disparities, the data shows that people are still adamant about their worth in a tight labor market, where shortages will likely stick around for years — even as wages go up.

For instance, in November 2019, the last true pre-pandemic reading, respondents with less than a college degree set their reservation wage at $51,672. In November 2022, that had soared up to $59,843, a 15.8% increase. This suggests that people traditionally left out of wage gains were still expecting to make more.

The demand for higher reservation wages compared to previous months of the survey comes as businesses still struggle to staff up, a struggle that may never be solved. Persistent labor shortages means those reservation wages are perhaps more attainable, and they also mean that workers could have more security for years. While job seekers and current workers may care about other work aspects beyond pay like whether a job is remote or whether an employer offers paid time off, pay is still important.  

In fact, a report from Indeed and Glassdoor researchers write that "compensation remains king for job seekers."

"Among employed US workers ages 25-54, higher pay was the most often selected reason they searched for a new job," the authors wrote. "This is true for all industries, including those working for hourly wages."

Pay has been important during the Great Resignation as well, with one survey result from Pew Research Center showing some people quit in 2021 in part because their pay wasn't enough. At the same time, job switchers are seeing a big pay bump.

The record reservation wage also backs up what economic data has continually shown: The labor market doesn't seem too worried about a recession. Workers are still happy to quit at near-record rates, with job openings still high, and hiring still robust. Their expectations for higher wages shows that, even as the market cools a little, workers still very much see a market tipped towards them.