Competition for Workers Raises Pay

The Wall Street Journal reported recently that economists are tweaking financial forecasts in response to rising labor costs.

When the economy was weak, companies saved money by squeezing suppliers. That strategy changed as the economy rebounded.

The Journal reported that with the unemployment rate at 5.5% and salaries rising, companies must evaluate how to cover increased labor costs. If they pass along the increase to consumers, it could affect the inflation rate, a key consideration for the Federal Reserve.

Mark Zandi, chief economist at Moody’s Analytics Inc., told the newspaper: “Quit rates are up, and retention rates are down. That’s when you see wages increasing.”  S