The market wasn't ready Thursday when the second-quarter
Employment Cost Index
showed an unexpectedly strong gain of 1.1%. The key read on wage inflation -- one of the economic reports
follows most closely -- knocked stocks and bonds lower as investors fretted that the
is likely to raise rates at its Aug. 24 meeting.
But at least one reader of
probably wasn't surprised by the economic news. Sunday, we received the following email (the writer has requested anonymity):
From out here in the trenches with the blue-collar workers, we are receiving wage increases that we have not in the past several years. Six percent wage increases are normal, but many of my friends are seeing 10% to 15%. The real fact is that the wage increase is the driver of inflation, and what the Fed has been watching is wage inflation. If Alan Greenspan does not act now, he is going against his own policy. It is so good out here in the blue-collar trenches that workers can demand a wage increase and receive it. One example was a large business owner overheard telling one of his managers that he hopes for a recession so that he will be able to find skilled blue-collar workers. If that is not bad, what is? Another example was one company that had to shut down its night shift and turn away orders because of a shortage of workers. The company I work for had to increase its starting rate by 10% so it could get high-school graduates. This is not very uncommon in central Pennsylvania, as many other businesses have had to increase starting wages.
It sure sounds like things around Pennsylvania are tighter than the
let on in its comments about the region in last month's
(that's the summary of anecdotal information on the economy that district Federal Reserve Banks compile for the
Federal Open Market Committee's
The rate of wage increase in the region does not appear to have accelerated, according to businesses surveyed in recent months. However, reports of rising benefits costs have become more common. Some labor contracts that have been signed at area firms recently included wage increases averaging around 4% per year over the life of the contract.
Now, it's important to remember that what this reader has seen does not mean there are heavy wage or inflation pressures nationwide. Some areas of the economy are booming. Some, decidedly, are not. All we really know is that the economy is smoking where this guy lives. It'd be a different thing if we had mail from people all over the country telling us what they were seeing. Then we'd have something akin to the Beige Book. That might give some early reads on what's going on in the economy. That might tell us something about what the Fed is going to do.
That's where you come in. We'd like you to jot down, in a hundred words or less, what the labor market looks like in your back yard. Are companies having a hard time filling jobs? Are employees clamoring for a bigger piece of the pie, or are they settling for smaller raises, either because of lower inflation rates, rising wealth levels or lingering memories of downsizing?
Send your thoughts on to us at
email@example.com (don't forget to include your full name and to tell us what part of the U.S. you live in). We'll compile what you send, maybe talk with an economist or two and present what we've found, along with a sampling of the letters, on Tuesday.
Will it move the market? Nope. But maybe by adding your eyes to other readers', you'll get a perspective on the economy that you can't get by just looking at numbers. Maybe you'll get a more human sense for what's going on with the American economy.
And that just might give you an edge in watching the Fed.