Chapter 11. What About Inflation from Labor Costs?

In This Chapter

  • How labor costs fit in with price inflation

  • The productivity and unit labor costs report

  • The employment cost report

  • Market reaction to the reports

Everybody loves a big pay raise. And everybody hates inflation. But there’s really a connection between the two. And here it is: labor-cost inflation.

Wondering how the economy balances low inflation with solid growth for workers? It’s all about wages and salaries being based on workers being paid based on doing a good job. That is, it’s okay if workers are paid for producing more. We are talking about worker productivity—that is, producing more each hour of work. Productivity links healthy economic growth with low inflation. While we get ...

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