The reservation wage, or the lowest wage rate at which a worker will accept a particular job offer, has declined this year to $74,135 from $82,236 last year, according to the New York Federal Reserve’s recent Survey of Consumer Expectations. This decrease was most pronounced for men over 45.
In some respects, this decline should not be surprising given the growing discontent inside the American labor market despite a 4.2% unemployment rate that can best be described as full employment.
Roughly 66% of Americans work in fear of losing their job, according to the recent consumer sentiment survey from the University of Michigan.
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In the New York Fed’s survey, satisfaction over wage compensation, nonwage benefits and promotion opportunities all declined by 1.1, 1.2, and 1.7 percentage points, respectively, in March.
Satisfaction with wage compensation is at its lowest level since November 2021.
Given the risks around employment as the reality of the U.S. trade war sets in, the public well understands that an increase in business costs will translate into higher unemployment, slower wage growth and lower real disposable income.
When one thinks about democracy and its discontents, one might want to start here.
