A consistent debate in economic circles in recent years has waged around the “tightness” in the labor market. That is, if labor has too much negotiating power they can dictate prices and that might put upward pressure on inflation. Measuring labor market tightness isn’t an exact science, however and there are many ways to gauge the tightness. My preferred measure is wage trends and employee quit rates. In short, when labor has a lot of negotiating power they transfer jobs in favor of higher wages. This forces employers to compete to keep labor and is usually consistent with an economy that is hot, perhaps too hot. ... (full story)