A healthy labour market is the ultimate sign of a well-functioning, growing economy.
The US economy is currently in its sixth year of expansion, and amid all this, the unemployment rate has been tumbling.
But one thing continues to be missing: a clear sign that wages are growing for America’s workers.
When unemployment falls, the labour market should be tightening, and that means it should be increasingly difficult to hire good workers. And all that should manifest in worker compensation rising.
While more and more companies are announcing plans to raise wages, we’re still waiting for confirmation that this indeed is a nation-wide trend.
For now, we can only keep an eye on the leading indicators. In today’s NFIB small business optimism report, we got two big signals.
Increasing numbers of businesses are raising pay. Also, increasing numbers of businesses are planning to raise pay.
Meanwhile, quality of available labour is increasingly becoming the single most important problem for businesses. This means that the pool of labour is becoming more shallow.