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

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28 comments on How Did Covid Impact the Minimum Wage Someone Would Accept for a Job?

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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.

This post originated at MishTalk.Com

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Mike Shedlock

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28 Comments
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RonJ
RonJ
3 years ago
“You can even see it at Wendy’s. I had to place my order by kiosk recently. No one would take my order.”
I wonder what that will do for business at the drive through window.
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RonJ
RonJ
3 years ago
“With demand for jobs in some sectors still high, and increasing number of boomers retiring, we have intense wage pressures.”
Senator Schumer recently was pushing replacement theory. It would solve the problem of how to push down wages.
More immigration, legal and illegal.
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FromBrussels2
FromBrussels2
3 years ago
So Mish , unlike what you said the other day, inflation is here to stay ……it rhymes !
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Mish
Mish
3 years ago
Reply to  FromBrussels2
There are many inflationary and deflationary forces
Strongest cross currents ever
May write a post debating myself on this
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vanderlyn
vanderlyn
3 years ago
Reply to  Mish
best to always go back to first principles. inflation is money and debt creation, when debt is money, as she is, in our land. the prices of things is a separate but close. and so many other factors including time lag. my study of money printing over centuries will show that inflation in prices can have a lag of months to 20 years. a few classic and wonderful studies and books on this subject. we had 25 years of money printing in 2 years of plague 2020 and 21. per shadow stats. the price of beer, hookers and blow is a separate study. beer is up. more hookers now, for sure, in my hood. blow, i don’t know. weed prices falling, for sure over production, as i am an investor in this space for many years. legal end. but the illegal is endemic everywhere. i think you missed the mark this time old boy. inflation of money supply is wildly crazy. will take a long time to whittle away. imho. i pray every night to my roman god jupiter that r/e prices plunge. loving rates jacking up. good for us savers. makes for a saner world, too.
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Mouse
Mouse
3 years ago
Both sets of statistics can be true — sort of.
Many jobs were automated away. Those jobs now pay $0 / hour.
The remaining jobs now pay “more” … there are fewer of them, and the increase in pay kind-a-sort-a-not-really keeps up with the cost of living. The cost of living is rising faster than what CPI reports.
So yes, nominal worker pay is indeed up!!! Don’t worry, by the time the union presidents up dues and Washington DC taxes are factored in, the workers will net a lot less in nominal. But for now, they got a raise! Some of them anyways
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Webej
Webej
3 years ago
The cost of fast food is now excessive. And the quality?
Trick question: There’s no such things as excessive quality
And certainly not in fast-food ‘dining’
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El_Tedo
El_Tedo
3 years ago
Reply to  Webej
There’s no such things as excessive quality
You’ve never had Popeye’s spicy fried chicken.
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8dots
8dots
3 years ago
Reply to  Webej
“The Trial Of Adolf Hitler” by David King, for fun and…Beer Putsch
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8dots
8dots
3 years ago
QQQ closed Nov 9/10 gap but SPY & DIA didn’t. Salmo we don’t know what will happen next.
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8dots
8dots
3 years ago
In certain neighborhoods in NYC employment and marriage are form of slavery. Those who dare, the boys & girls will herd
together and gang on the traitors. Offer them whatever, they don’t care. That’s how Dem win, there is no change of character
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Avery
Avery
3 years ago
Haha!
These peons need to incorporate and do the ‘double-Irish with Dutch sandwich’ tax dodge like The Big Boys!
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Doug78
Doug78
3 years ago
The Boomers were in a different environment when we were young. Being the most numerous cohort in the population made it that we were continually in competition with each other for jobs. If you didn’t like the wages there were plenty who would take your place. Nowadays for the younger generations the mass retirement of the Boomers are opening up positions at a rate not seen before hence the upward pressure on wages. It is a welcome situation and hopefully it will continue and perhaps permitting wage-earners to claw back some money that before went to capital and to rent-seekers. The pendulum has to swing back to correct the excesses and make the middle class regenerate which will fill the coffers as never before. I may sound like some type of socialist but I am not. I just don’t think oligarchy is not a good social nor economic system and we risk end up there.
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Zardoz
Zardoz
3 years ago
Reply to  Doug78
People are able to hold out for a living wage, which is good because the legal minimum hasn’t been livable for 20 years.
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Doug78
Doug78
3 years ago
Reply to  Zardoz
Very true.
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Doug78
Doug78
3 years ago
Reply to  Doug78
“I just don’t think oligarchy is not a good social nor economic system and we risk end up there.”
Maybe I should have said “I just think that oligarchy is not a good social nor economic system and we risk end up there.”
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FromBrussels2
FromBrussels2
3 years ago
Reply to  Doug78
Makes me wonder , what exactly do you live off , if you are not a ‘rent seeker’ ….Rent seeking is of course a rather general concept , I think I am a rent seeker nevertheless ……other people are pension parasites the latter being much more of a burden to the system than the previous ….
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Doug78
Doug78
3 years ago
Reply to  FromBrussels2
In rent seeking I wad thinking of people like you who are paid to say stupid things in internet forums.
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Lisa_Hooker
Lisa_Hooker
3 years ago
Reply to  Doug78
Where can I get one of those gigs? I have some spare time available.
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FromBrussels2
FromBrussels2
3 years ago
Reply to  Lisa_Hooker
lemme know if you happen to find one !
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Doug78
Doug78
3 years ago
Reply to  Lisa_Hooker
Public relations companies working for shady companies and countries are hiring but you have to have a track record of saying really stupid things. FromBrussels is a great example.
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FromBrussels2
FromBrussels2
3 years ago
Reply to  Doug78
that don t answer my question ,does it ?
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vanderlyn
vanderlyn
3 years ago
Reply to  Doug78
100% CORRECT old sport. i have not been able to find one person who cannot find a job from coast to coast. my pals are from 18 to 65. lots and lots. over schooled. dropouts. white collar to pink and blue collars. farmers to investment bankers. i’m in community college too. been attending for decades. for fun. enrollment way down. which happens during good times for jobs. mish missed this important point. demographics is changed mentality and ability and amount of jobs out there. and the plague changed many people’s mental outlook on life in general including the mundane like working for money. we have something afoot. but it ain’t a recession. right now. if one studies enough history we have gone through transitions in types of societies and work. 10,000 years ago domesticating plants and animals changed work from just hunting and gathering to industrial revolution part 1. to on and on………to work from home and be like jeff toobin on a zoom call and call that work. i’ve always said, none of our great great great grandmothers would consider what we do as work. maybe work like activities. i’ve been a degenerate gambler with FX and equities and ponies and politics for decades. i never once told my kids i actually “worked”. i’m no liar. didn’t want them being a liar either.
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Lisa_Hooker
Lisa_Hooker
3 years ago
Reply to  Doug78
Doug, the last time the middle and lower classes made a big remarkable economic recovery it took almost a century of the Black Death.
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shamrock
shamrock
3 years ago
Wow those are some eye popping numbers, perhaps not surprising since you need at least $40-50k to go from non-working to working to make up for all the free stuff from government you would be giving up.
All the fast food places have apps for ordering now, much easier than a kiosk or a human and you get your food cheaper in most cases due to specials and rewards available only on the app.
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KidHorn
KidHorn
3 years ago
Reply to  shamrock
Some have apps that produce codes that are then scanned at the kiosks.
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lamlawindy
lamlawindy
3 years ago
Reply to  shamrock
The apps allow the stores to gather data on what you like to order, how much of it, and when. This then lets them send you notifications & “deals” for the future.
Apps also facilitate loyalty rewards programs. Back in the day, we’d get a punch-card: buy 5 pizza slices, get a 6th one free. The problem was that the cards would get misplaced or lost or forgotten; this doesn’t happen when one orders from the app.
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Lisa_Hooker
Lisa_Hooker
3 years ago
Reply to  shamrock
shamrock, that’s what I like about our civilization today. You “need” a multi-hundred dollar “smart” phone to be able to buy discounted food. Soon any food at all?
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