US Workers' Wage Expectations Unexpectedly Collapse

Tyler Durden's picture

Cue the latest economic (and Phillips curve) paradox.

On one hand, the US unemployment rate is at a 16 year low of 4.4%, suggesting little if any slack in the US economy, and according to anecdotes from both the Fed's Beige Book and industry sources, labor shortages are so acute that - if one believes the recently discussed report from the NAHB - up to 75% of builders are unable to find construction workers.

On the other hand, according to a new Federal Reserve survey published on Monday for the first time, U.S. workers and job-seekers are so disenchanted with the labor situation, and harbor so little hope for higher paychecks, that even as they increasingly search for new jobs, they not only expect fewer job offers but anticipate increasingly lower paychecks.

According to the Fed survey, respondents said in July that the lowest annual salary they would accept in a new job would be $57,960, down from $59,660 only four months earlier and over $62,000 at the end of 2016: in fact, the average so-called "reservation wage" tumbled to the lowest amount since March 2015, as shown in the chart below.

According to Bloomberg, the decline in reservation wages was broad-based across demographic groups, showing up in responses from men and women, younger and older respondents, and those with and without college degrees alike. It offers a counterpoint to other data that suggest the U.S. job market has reached a state consistent with maximum employment, and may help explain why labor force participation has risen in recent months.

Worse, when asked what salary they expected in job offers over the next four months, the average response tumbled by 7% to $50,790 from $54,590 in a span of just 4 months, when the last survey was taken in March.

The latest Fed survey simply reflects the realities of Obama's part-time "waiter and bartender" recovery: lots of available jobs with little to no wage growth potential.

The survey - which has been conducted since early 2014 but was published for the first time on Monday - also showed that more than a fifth, or 22.7% of respondents, searched for a job in the last four weeks, up from 19.4% in March, with young people accounted for most of the increase, according to Reuters. Unfortunately, judging by collapsing wage expectations, these job hunts did not go as well as expected.

Finally, it's not just the quality of available jobs, but also the quantity: respondents saw a 22% likelihood of receiving at least one job offer in the next four months, down from an average response of 25%eight months ago, which in turn puts a giant question mark over the validity of the recent JOLTS survey, according to which as of July the US had a record number of Joe Openings...

... and while that number may in fact be accurate, today's Fed survey data suggests that employers have open positions, they just don't want to pay much beyond the minimum wage to have them filled.

Whatever the real reason behind the Fed's latest disturbing finding, it goes without saying that without wage growth, there can be no "benign", wage-led inflation of the type that the Fed has been desperate to create for the past 9 years. In fact, if accurate, today's Fed data suggests that with wage expectations at two year lows, what should come next is not more rate hikes but even easier monetary conditions, which in turn would lead to an even greater asset bubble and, of course, an even more trapped Fed.

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forestgump227's picture

I would feel lucky if I can get 30k a year

GUS100CORRINA's picture

US Workers' Wage Expectations Unexpectedly Collapse

My response: It looks like the REAL ECONOMY is beginning assert its UGLY HEAD. The PRESSURE in BUSINESS must be INTENSE with all of the INVENTORY CHANNEL STUFFING and FINANCIAL ENGINEERING about to come to an abrupt END.

Of course, the continued attacks on the POTUS are not helping. The MARXIST PROGRESSIVE LIBERAL LEFT do NOT know what it means to work and have to do hard labor everyday to put food on the table for others in your family. 

On top of all of the above, the US HEALTHCARE costs ushered in by the MARXIST PROGRESSIVE LIBERAL LEFT are BLEEDING the NATION DRY.

toady's picture

It's W's "ownership society"..... everyone for themselves.

There was a time when employees and employers worked together to make a comfortable work environment and a quality product.

Now the employees figure out ways to do the minimum, and employers figure out how to pay the minimum.

GodGunsGov's picture

Not really. This shift primarily happened when businesses (and investors) adopted a "share holder value only" management philosophy. This philosophy leads to short term, quarter-to-quarter profit outlooks taking precidence in both government and business management decisions.  This was happening well before "W". Regardless of when shift occurred, there is no doubt that both capital and labor are simply playing a hard Min-Max game, to the detriment of both.

toady's picture

W's "ownership society" took the burden of defined pension plans (and signaled the rise of the 401k) and employer paid healthcare off the corporations to "enable people to find their own opportunities in the marketplace"....

of course, wall street scum and obamacare filled the vacuum, much to everyone's detriment.

Now corporations have no responsibilities to their employees, so employees turn it around and do as little as possible.

And the downward spiral continues....

Son of Thor's picture

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do...

XqWretch's picture

Unexpectedly? It's about time people wake the fuck up. This shit (declining standard of living, lower wages, etc.) has been going on for decades.

ThirdWorldNut's picture

But the Economist thinks all Nigerians could increase their wage 1000 times by simply coming to USA.

Looks like bad communication in the house of Rothschilds.


casapi's picture

no immigration till unemploymeny has been solvedfor several decades

Angry White Guy's picture

The US is headed for a Brazil like country....both demographically and economically.  1% light skinned people with 99% of the resources and income living in gated communities and guarded compounds and 99% brown people with 1% of the income literally fighting each other in the streets for table scraps.

The country is slowly falling apart, leaving behind 99% of us.  I haven't met anyone in the last 2 years that is actually 'happy' and living a sense of a normal life.

It can't just be me.

To be honest I'd could give a shit if the world ended TODAY, or tomorrow.  I find myself actively hoping for the end.  Living and growing up in this country and dealing with what 'reality' has become has really beaten most of the positivity right out of me.

I've grown to expect the worst and have yet to be suprised.

toady's picture

I'm not actively seeking an end, but the idea pops on my head more often lately. If I knew I'd be working part time jobs for petty cash and healthcare in my fifties when I was younger I wouldn't have believed it.

SweetDougisaTwat's picture

I am in my early fifties and remain gainfully employed to the extent that I actually am counted among the upper middle class. Yet, I have the same angst and negativity as yours well embodied by now--long before I read your post.

I have no heroes in life, but I am fond of Ross Perot who warned us all two decades ago about the sucking sound of jobs moving outside our borders.  Of course he was talking about NAFTA that our penis-nosed redneck President from Arkansas signed into existence for Big Business and the Deep State.  It sanctioned much of what was already happening with factory migrations and H1B visas, and opened the flood gates on the matter.  So much of the Millenial generation today have no idea of 1) how robust and vibrant the economy was in the Eighties and Nineties, and 2) how NAFTA legitimized and furthered an economic destruction in which we now all exist.

Bill had famously said, "I feel your pain."  But, we know that he was lying and has always been just a narcissistic (and traiterous) piece of shit.  Same is true of his cunt wife.

The US economy and the US society are toast now.  It will get worse as my Generation X and the Millenials behind us become further dislocated by Indians, immigrants, robotics, strategically lower salaries, downsizing, and early retirements forced upon us.

It is no longer fun to be living in our country. We may already be a Third World society like Brazil.

When you say, "It just can't be me" you are very correct.  It is not just you, and you are not the only angry white guy out there.

bass ackwards's picture

Lighten up, pick yourself up, but dont give up..its unamerican

Wigglesworth's picture

Stop the invasion by both legal and illegal immigrants and you will see wages rise.

Bobbyrib's picture

There are no such things as outsourcing and automation, with the latter not increasing over the years?

Angry White Guy's picture

We pretend to work they pretend to pay.

Youri Carma's picture

Sounds like the former Sovjet and East-Block system.

But then again what's the difference between Communism and Capitalism?

In Communism they nationalize the banks and then push them to bankruptcy then become Capitalists.

In Capitalism they push the bank to bankruptcy and then nationalize them then become Communists. :)

any_mouse's picture

End the FED. Then discuss solutions.

Bobbyrib's picture

The TPTB, Corporate America, and the US Government are all working together to push down wages in the country, while the Federal Reserve prints money to try to meet economic growth expectations (as well as trying to paper over malinvestment) , they have no chance of reaching.

The country is fucked unless it revolts. Being that we seem to be a country of imbeciles, we're fucked.

Welcome to Neo-Feudalism.

Own productive land, be self-sufficient, and tell the unholy trio to go fuck themselves.

Pollygotacracker's picture

It isn't your imagination, things in this country have become much worse. My career is behind me. Thank God for that. I sympathize with people trying to scrape by. Too much greed. The economy has been strip mined. Too many factories are gone. Restaurant business is OK , but only due to credit cards and social security. Trump is trying to fix it. No one wants to help.

itstippy's picture

"US Workers' Wage Expectations Unexpectedly Collapse"

Chairperson Yellen is going to have to drop yet another data point from the Fed's economic outlook model.

Rubicon727's picture

First and foremost,  a few short years ago, The Bureau of Labor Statistics reconfigured the entire matrix of *who* was/was not UNEMPLOYED.

Using the standard measure, as Economist John Williams on has chronicled, the US unemployment figure IS NOT 4.4% or any other such figure.......Anyone 'UNEMPLOYED" FOR MORE THAN FOUR WEEKS is COMPLETELY DROPPED FROM THE UNEMPLOYMENT ROLLS.

Thusly, using the standard measure, (w/o the BLS manipulations), Dr. Williams has chronicled 22%-23% UNEMPLOYED FOLKS, for the last few years. 



If we're going to read the facts, then the facts need to be published, accordingly.

MaxThrust's picture
"US worker's Wage Expectations Unexpectedly Collapse"

Quick hit the panic button. Another round of Opioid deaths are coming.

andrej's picture

the US unemployment rate is at a 16 year low of 4.4%

You don't say...