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MNI INTERVIEW: US Wage Pressures Likely To Be Longer Lasting

(MNI) WASHINGTON

Shortages of new workers are likely to keep labor costs high, Philly Fed visiting scholar Giuseppe Moscarini says.

The U.S. is likely to see continued strong wage pressures even if an economic slowdown raises unemployment over the next year, barring a recovery in labor force participation closer to pre-Covid levels, Yale University professor and visiting scholar at the Federal Reserve Bank of Philadelphia Giuseppe Moscarini told MNI.

Labor flow trends show the fraction of workers who move from job to job every month is falling, while the job-finding rate for the unemployed remains elevated, according to Moscarini. That indicates a shrinking supply of labor from those looking to switch jobs -- and continued upward pressure on labor costs and inflation, he said in an interview.

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The U.S. is likely to see continued strong wage pressures even if an economic slowdown raises unemployment over the next year, barring a recovery in labor force participation closer to pre-Covid levels, Yale University professor and visiting scholar at the Federal Reserve Bank of Philadelphia Giuseppe Moscarini told MNI.

Labor flow trends show the fraction of workers who move from job to job every month is falling, while the job-finding rate for the unemployed remains elevated, according to Moscarini. That indicates a shrinking supply of labor from those looking to switch jobs -- and continued upward pressure on labor costs and inflation, he said in an interview.

Keep reading...Show less