JOLTS came in today at 5.4 million for April, a healthy jump from the 5.1 million in March.
The increased job openings raises the specter of wage inflation in the near future.
What does the JOLTS figure say wage growth should be?
American Workers – Job Openings per Unemployed and Wage Growth
The following is a look at the number of job openings per unemployed worker against year-over-year wage growth (year-over-year wag growth is measured by the Employment Cost Index or ECI).
Unsurprisingly, there’s a negative relationship between the two, meaning that when job openings per unemployed go down, i.e. there’s lots of job openings for fewer unemployed, wages usually increase.
The opposite also holds. During weak economic times, when there are lots of unemployed looking for fewer job openings, wage growth is usually weaker.
Fascinatingly, or sadly if you’re an American worker thinking you’re underpaid, the relationship has broken down in recent years.
American Workers – The Breakdown in the Relationship Recently
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