Barry Ritholtz at Bloomberg:
If the U.S. labor market really were tight, wage pressure would be sending pay much higher. Instead, increases have been modest, barely keeping up with the country’s 2% inflation rate. This is evidence of widespread underemployment, which is keeping a lid on wage pressures.
which may sound familiar because it’s what I’ve been pointing out for years. Since the unemployment rate does not take the labor force participation rate into account and does not measure underemployment, it is quite possible to have low unemployment and underemployment.
There is no mystery here. It’s the classical economics explanation for what we’re seeing right now. It also contradicts any notion that the demand for labor is such that we need to import more workers.
One complication is that there is no “labor market” as such but lots of small labor markets, both geographical and within sectors of the economy. Still, what we’re seeing does not suggest any broad labor shortages.