The Real Wage Growth Puzzle

“Reports from District contacts indicated that some businesses facing tight labor markets found it more effective to expand their workforces by using a variety of nonpecuniary means, including offering < job flexibilty and training, rather than increasing wages.”@federalreserve

(1) “But if you’re Deutsche Bank, you’re not buying the idea that there’s a real-wage growth “puzzle.” Because if you’re Deutsche Bank, what you’ve done is corrected for an improperly measured unemployment gap. I’m not going to bore you with that, but suffice to say…

(2) the bank thinks the unemployment rate is not the best way to measure slack in the labor market and once you “correct” for that and assume a lag between labor market tightness and an uptick in wage growth, the fit is better.

(2) the bank thinks the unemployment rate is not the best way to measure slack in the labor market and once you “correct” for that and assume a lag between labor market tightness and an uptick in wage growth, the fit is better.

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