Is the number of available but jobless workers in the United States shrinking to the point that employers may be forced to grant inflationary wage increases to attract new employees or keep the ones they have?

Federal Reserve Chairman Alan Greenspan began raising that question about two years ago, and last week he cited the continued decline in the number of available workers as a key reason the Fed is likely to raise short-term interest rates at a policymaking session next week.

"Should labor markets continue to tighten, significant increases in wages, in excess of productivity growth, will inevitably emerge, absent the unlikely repeal of the law of supply and demand," Greenspan told Congress.

Greenspan defines what he calls "the ever-shrinking pool of available labor" as the combination of two sets of would-be workers.

The first comprises the officially unemployed -- people who don't have a job but actively looked for work in the four-week period prior to the Labor Department's monthly survey of 50,000 U.S. households. There were 5.5 million people in that category last month, resulting in a national unemployment rate of 4.2 percent -- close to a three-decade low.

The second group -- at 5.3 million, almost as large as the first -- includes people who weren't looking for a job in the previous month but did so sometime in the prior 12 months, and said they both want one and are available to work.

Over the past five years, this combined pool of available but jobless workers has declined by 28 percent, from 16.5 million in January 1994 to 10.8 million last month. But even so, Greenspan acknowledged last week that "labor-market tightness has not, as yet, put the current [economic] expansion at risk" by generating inflationary wage increases.

Economists and policymakers have suggested a variety of reasons that the shrinking pool of available workers hasn't triggered the sort of upward spiral in wages that it usually did in the past. At the head of the list is the increasingly competitive nature of the U.S. economy, which has caused most business executives to conclude that they can't raise the prices of the goods and services they sell -- or at least not by very much -- without losing market share and profits to their rivals.

So in an effort to keep profits from declining, firms have found ways to boost the productivity of their workers and thereby keep costs under control -- for example, by investing in labor-saving technology.

"If you think you can't raise prices no matter what, you substitute capital for labor" in many different ways, Fed Vice Chairman Alice Rivlin said in an interview. "I think that is what has happened. . . . You know, all the people are trained to think this way in their MBA classes. Now they can do it."

In a sense, Rivlin said, the shortage of labor has caused managers to take the necessary steps to increase productivity, and as the shortage has gotten worse, the search for productivity-enhancing actions has become even more intense.

Another big reason employers haven't raised wages as much as they would have in the past is that with the strong demand for labor, people who were outside the pool of available unemployed workers, as Greenspan has defined it, have jumped in.

The need for workers has forced many firms to relax some of their hiring standards, such as for education levels or specific skills, and to relax their work schedules. Advertising "mother's hours" has become a staple of firms looking for help, particularly part-timers.

As a result, some people who were not looking for work because they thought no one would hire them have found that jobs, in fact, are open to them.

At the same time, there are always people who aren't in the labor force and have a change in circumstances. For example, a full-time student graduates, looks for work and becomes part of the labor force.

All this churning has helped the growth of the labor force. From May 1995 to May 1996, when employment grew about 2.5 percent, the labor force expanded 1.8 percent. That growth in the labor force wasn't enough to keep the labor pool from shrinking, but it was far above the roughly 1 percent increase that would have been in line with the growth of the working-age population.

Both the share of the working-age population in the labor force -- that is, people who either have a job or are officially unemployed -- and the share of that population that has a job, hit record highs earlier this year.

On the other hand, last month 7.7 percent of the people of working age who were not in the labor force nevertheless said they wanted a job. Five years earlier, that figure was just over 11 percent.

Labor markets are definitely getting tighter, though not rapidly. Last month's 4.2 percent unemployment rate was only two-tenths of a percentage point lower than it was in May 1998.

Productivity gains have been so strong over the past year that the economy has managed to grow around 4 percent with a relatively modest increase in employment. In fact, total employment has increased over the last year only slightly faster than the size of the labor force.

That suggests that Greenspan's goal of keeping the labor markets from getting any tighter may not be all that hard to achieve.