palletcentral.com PalletCentral • July-August 2017 27
of both productivity and the labor force. Productivity growth has
fallen below 1% for the last several years. Labor force growth is now
near 0.5%/year, in part due to the aging of the population and lower
participation rates for younger adults. Labor force growth will go
even lower over the next few years if immigration is reduced.
Even though economic growth has averaged only 2% over the last
seven years, unemployment has declined significantly.
Unemployment is now approaching 4% levels not seen since 2008.
Wage pressures are building. The headline wage number
published by the Bureau of Labor Statistics (BLS) is very misleading.
The series reported by BLS has been steady near 2%/year. It appears
the reason was the changing mix of jobs. Job losses in high paying
jobs, such as manufacturing, were being offset by job growth in
lower wage sectors, such as retail sales. So on average, wages
appeared to be moving up at a modest 2% rate, despite falling
unemployment.
The other series constructed by analysts at the Atlanta Federal
Reserve, tracks wages for a given set of jobs. This series shows that
wages have been rising much faster. For a given set of jobs, wages are
moving up 3.5%/year.
Another indication of the tightening labor market has been
several surveys that suggest that employers are having difficulty in
