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New US workers offered record average wages in November, NY Fed says

Published 12/18/2023, 12:01 PM
Updated 12/18/2023, 04:31 PM
© Reuters. FILE PHOTO: U.S. one hundred dollar notes are seen in this picture illustration taken in Seoul February 7, 2011. REUTERS/Lee Jae-Won/File Photo

By Michael S. Derby

(Reuters) -The average wage U.S. employers were willing to offer new workers surged to record levels in November, a report from the New York Federal Reserve showed on Monday.

The average full-time annual wage offer moved to $79,160 in November from $69,475 in July, the regional Fed bank said in its Survey of Consumer Expectations Labor Market Survey. The wage in November was the highest ever in a survey that dates back to 2014 and likely reflects ongoing labor market tightness, with firms being forced to come up with higher levels of cash to secure employees.

Workers in the survey also trimmed their so-called reservation wage, which is the minimum pay level someone will take for a new job. That dropped to $73,391 as of last month, from $78,645 in July.

The report also showed that churn in the job market may be set to increase. Some 23.1% of respondents said they'd searched for a new job in the last month, compared to 19.4% who said the same thing in July. Meanwhile, the expected likelihood of moving to a new job rose to 12.3% in November, from 10.6% in July. The report also found a record 3.5% of respondents said it was likely they would move out of the labor force, which was the highest reading ever for the survey.

Market participants and central bankers are all scanning the labor sector for signs of weakness in the wake of an aggressive string of Fed rate hikes since the U.S. central bank kicked off its tightening cycle in March 2022.

The Fed has strongly signaled it is likely done pushing up short-term borrowing costs in its bid to lower inflation, and central bank officials are now actively weighing whether ebbing price pressures will allow them to lower the policy rate next year.

© Reuters. FILE PHOTO: U.S. one hundred dollar notes are seen in this picture illustration taken in Seoul February 7, 2011. REUTERS/Lee Jae-Won/File Photo

Some of the confidence that inflation will continue to retreat is tied to the view that labor market conditions are becoming more balanced. That could reduce upward wage pressures and, in turn, help guide overall inflation back to the Fed's 2% target. But it remains a process that is still playing out.

"Labor demand still exceeds the supply of available workers" although the balance between those who are hiring and those who are looking for work is continuing to equal back out, Fed Chair Jerome Powell said in a press conference last week after the end of the central bank's final policy meeting of the year.

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