The "curious" news in today's jobs report - as Neil Irwin puts it today in the New York Times - is that the economy keeps creating more than 200,000 jobs per month, and the unemployment rate keeps dropping, but worker pay isn't following the script. Wages are up just 2 percent over the last year, which outpaces inflation, but not by much.
You can look at this a couple of different ways. One is that wage growth is right around the corner -- when unemployment is this low, it is bound to show up. As Ian Shepherdson, chief economist of Pantheon Macroeconomics, wrote today, with companies "now reporting unfilled job openings at the highest level since April 06, it is not reasonable to assume such sluggish wage growth will persist much longer."
Another way, as Elise Gould of the liberal Economic Policy Institute put it this morning, is that the economy still has a lot of healing left to do: "Despite a year of solid job growth there is still ample slack in the labor market." You won't see much wage growth, if that's true, until a lot more people have jobs, both folks who are looking for work now and those who had given up looking for work.
So who's right? The relationship between unemployment and wage growth over the last 35 years suggests the around-the-corner crowd. But very recent history suggests otherwise. You can see that in the following chart, which shows wage growth in every month the unemployment rate fell between 5 and 6 percent since 1980.
As you can see, the closer unemployment gets to 5 percent, the faster wages rise, historically. But note, also, that wage growth has typically been much higher - especially in the 80s and 90s - when the unemployment rate was right around 5.5 percent, the rate for last month. The only other time wages grew this slowly, at this level of unemployment, was in the early 2000s.
The modified question, then, is whether something has changed in the economy that is pushing down wages for everyone - and if so, whether it will keep wages down even as unemployment marches toward 5 percent or less.