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Expand chart

Note: The chart adjusts for workers receiving higher or lower wages in a new job; Data: Bureau of Labor Statistics; analysis by Jed Kolko / Indeed.com; Chart: Chris Canipe / Axios

The U.S. has the very picture of a squeaky-tight jobs market, according to government figures released today: Unemployment at a 17-year low — at 4.1%, a top-line jobless figure just a tick away from the classic, 4% definition of full employment; seven straight years of jobs growth; and longer job searches — those lasting 15 weeks or longer — now only 1.5% of the work force, down from 2% a year ago.

Yet wage growth — one of the key underlying factors in last year's political earthquake with the election of Donald Trump — worsened last month (see chart). According to the law of supply and demand, employers should be sharply bidding up wages in order to capture increasingly scarce workers. But they aren't — and in fact, by the numbers, you might say they defiantly aren't. In October, they raised wages just a tad over inflation, at 2.4%, a plunge from September's already-miserly rate of 2.8%.

The background: Jed Kolko, chief economist for Indeed.com, the jobs-listing website, tells Axios that wages are sluggish because there are more idle workers out there than is apparent by the statistics. Just 79% of the prime-age work force, aged 25 to 54, is actually working, he says. Much of those — 43% — are people, mostly women, who say they are caring for kids or other family. Another 30% are disabled or otherwise unable to work. The remainder have other reasons for being idle, such as attending school or retiring early.

  • No one knows how many of those might be enticed into the work force by higher wages, but it's a chicken-and-egg question. If Kolko is right, employers somehow have a sense that they can wait out the situation and either hire only slowly, or attract workers without raising salaries. But the workers aren't giving in, either.

Thought bubble: We hear a constant squawking about an employee-and-skills shortage from companies of various types. What we do not see is many of these companies doing much about it, such as offering training programs or — as reflected in the monthly Labor Department figures — raising wages to attract workers to the jobs.

Go deeper: As a result of the plunge in wage growth, traders today reduced their bets on the Fed increasing the interest rate to tamp down potential inflation, as is reflected in a drop in the value of the U.S. dollar, the FT reported.

Also in the FT, fruit and vegetables are rotting in fields in the U.K. because of a labor shortage there.

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Why it matters: Misery for global aviation is likely to continue and hold back a broader economic recovery if nothing changes, especially with new restrictions on international border crossings. U.S. airlines carried about 60% fewer passengers in 2020 compared with 2019.

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