How Did Covid Impact the Minimum Wage Someone Would Accept for a Job? – Mish Talk

December 23, 2022

*Reservation wage data from the New York Fed*

The Reservation Wage is the minimum wage a person working would accept for switching jobs or a non-working person would accept for taking a job.

Please consider the New York Fed report SCE Labor Market Survey Shows Average Reservation Wage Continues Upward Trend

The Federal Reserve Bank of New York’s November 2022 SCE Labor Market Survey shows a rise in the average reservation wage—the lowest wage respondents would be willing to accept for a new job—to $73,667, its highest level since the series began in 2014. Respondents’ satisfaction with wage compensation, non-wage benefits, and promotion opportunities at their current job all improved in November compared to July. Regarding expectations, the average expected wage offer (conditional on receiving one) also increased and reached a new high.

Reservation Wages

Our measure of reservation wage, or the lowest wage at which the respondent is willing to accept a new job, comes from the following question in the SCE Labor Market Survey:

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?

Reservation Wage Between March 2014 and March 2020

Working: +19.3 Percent
Not Working: +14.3%

Reservation Wage Between March 2020 and November 2022

Working: +19.1 Percent
Not Working: +12.5%

With demand for jobs in some sectors still high, and increasing number of boomers retiring, we have intense wage pressures.

The result is soaring investment in ways to maximize reductions in headcounts.

You can even see it at Wendy’s. I had to place my order by kiosk recently. No one would take my order. When I asked, the manager said it was corporate policy at certain times of the day.