How did Covid impact the minimum wage someone would accept for a job?

Let's take a look at data from the New York Fed to answer the question.

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.

I do not know if it was that Wendy's or every franchise. But more and more self-checkout and kiosk ordering are becoming expected.

For what? The cost of fast food is now excessive. And the quality? 

Another Strong Jobs Report? Phooey

Payroll and employment data from the BLS, chart by Mish

Payrolls vs Employment Since March 2022

• Nonfarm Payrolls: +2,692,000
• Employment Level: +12,000
• Full Time Employment: -398,000

Employment fell by 138,000 in November.

Full time employment is down 398,000 since March and down by 480,000 since May!

For the latest jobs report, please see Another Strong Jobs Report? Phooey, and I Can Prove It

Question of the Day

Are we really adding millions of jobs or is the  Quarterly Census of Employment and Wages (QCEW) correct?

Please note The Philadelphia Fed Just Revised Jobs Lower by 1.2 Million for Q2

In the aggregate, 10,500 net new jobs were added during the period rather than the 1,121,500 jobs estimated by the sum of the states; the U.S. CES estimated net growth of 1,047,000 jobs for the period. Payroll jobs in the nation remained essentially flat from March through June 2022 after adjusting for QCEW data.  

We will not find out for many months which view is correct but put me in the QCEW camp.