E The U6 Indicator Portrays The Tightest American Job Market In Seventeen Years

It continues to be a conundrum for economists that wage and salary inflation in the U.S. seems so low at a time when the job market is very tight.

Indeed, as several National Bank charts highlight, the American job market may be at its tightest level since May of 2001.

The U6 indicator provides a broad measure of unemployment and under-employment in the American economy. In that way, the U6 measure is a better indicator of the job market than even the unemployment rate. Using the U6 measure, the job market is at its tightest in seventeen years.

A further sign of an increasingly tight job market is the fact that employer hiring costs (wages plus benefits) is also increasing. Private sector labor costs are currently increasing 2.9% (y/y), its fastest pace in ten years. As the second chart indicates, the increase in employer costs is similar in both the goods and service-producing industries.