Millions of open jobs and generous unemployment benefits during the pandemic shifted the balance of power away from employers and gave workers more bargaining power—so the story goes. But that may not be the case for everyone, according to new survey data.
Lower-wage workers—defined as those with incomes at or below $60,000—have lowered their expectations in recent months, according to data collected by the Federal Reserve Bank of New York in July and released Tuesday. These workers said their so-called reservation wage—the minimum amount they were willing to accept to start a new job—was $42,300 on average, below where it stood not only in March of this year ($50,800) but also in July 2020 ($43,400).
That suggests workers on the lower end of the pay scale don't necessarily feel like they’re in the driver's seat, as the chart below shows. Higher earners have not changed their expectations significantly in recent months. New York Fed researchers did not say why low-wage workers tempered their outlook in July.
Businesses have been eager to hire this year, with the number of available jobs hitting a record 10.1 million in June, the most recent data available. This hasn’t always translated into actual hiring, though. The U.S. added just 235,000 people to payrolls in August, the lowest number since January , a development that economists chalked up to an increase in virus cases. But expanded unemployment benefits have also been blamed for incentivizing workers to snub open positions, supposedly shifting power from desperate employers to jobseekers. Average wages increased 4.3% year-over-year in August, according to government data, a faster increase than the 3.2% seen the same month between 2018 and 2019, the last year-over-year August comparison before the pandemic.
But the New York Fed’s data shows the workers’ advantage might be overstated, at least for those on the lower end of the payscale.
Have a question, comment, or story to share? You can reach Rob at firstname.lastname@example.org.