opps total nonfarm payroll employment increased by 209000 in june far below the 225000 economists expected yesterday workers are not getting or demanding big wage increases – though average weekly earnings for all private sector workers in june increased by a 7 to 1155 up from may’s 1148 but higher prices are still eroding buying power workers are getting paid in reduced commute costs not money employers and workers are finding ways to get work done without crazy wage increases judith lamb of cloudpay a global payments organization – told me this morning that even though employers are relieved the “great resignation” from last year may be moderating or ended employers are keen on recruiting “employers are digging deeper into linkedin to reach out to talent” lamb said but they are also trying to stop their own employees from leaping employers are on the knife edge of being a poacher while resisting being a poachee even though workers won’t leave their current job for the same money and working conditions they are threatening to leave if they don’t get the working conditions they want remote work workers when they can are grabbing noninflationary increases in living standards in several ways they are saving on commute costs and employers are accelerating vacation time accrual and giving noncostly but emotionallyvalued perks like birthdays as a personal oneday holiday lamb said employers demanding onsite 5days a week will lose many workers one to three times a week is becoming a norm bottom line though employers may be bedeviled by tight labor markets employers lucky to have some work done remote can attract and retain employees in flexibility and not inflationary pay increases therefore the fed needs to ground itself in reality and stop being haunted by the inflation of the 1970s when us fed chief paul volker halted inflation with relentless interest rate hikes and a crushing recession though the us unemployment rate stayed at a super low rate of 36 in june it is still higher than april’s 34 rate and remember the unemployment rate is a lagging indicator reflecting the supply and demand of workers several months ago the true rate could be higher now today’s job report indicates the tight labor market is finally attracting people to work the new entrant share of the unemployed increased to 93 up from 84 last month the job leaver rate also increased from 126 to 132 layoffs are a lower share of the unemployed 484 down from 489 in may but mind you this is a big increase almost a 7percentagepoint increase from a year ago two months ago we saw worker confidence falling significantly from last year april 2023 quit rates fell to 24 way down from the april 2022 quits rate of 30 may quits rates are a little higher at 26 ziprecruiter survey shows workers’ confidence is falling job seekers’ confidence that jobs will be more plentiful in 6 months fell from 35 in the first part of 2022 to a low 25 in april 2023 workers are not so feisty in a european central bank forum paul krugman in 2014 started the conversation about the 2 inflation target we hear about so much writing for an audience of central bank governors and staff economists he argued the 2 inflation target is out of date nine years later we still haven’t answered why we should accept 2why not target 4 inflation or have zero tolerance 2 seemed like a good fuzzy comprise over the course of the 1990s many of the world’s central banks converged on an inflation target of 2 why 2 rather than 1 or 4 krugman says the 2 target “was not arrived at via a particularly scientific process but for a time 2 seemed to make both economic and political sense” and once the 2 gets widely adopted it takes on a power on its own “central bankers could not easily be accused of acting irresponsibly when they had the same inflation target as everyone else” 2 can really be no inflation prices go up and so does quality the 1000 computer of today is worth a lot more than the 998 computer of last year quality improvements make a price increase look bigger than it is but quality improvements also means we could have an inflation target of 4 and if productivity is up and wages are falling behind then buying power does not have to be crushed with big interest rate hikes the economic costs of recession and austerity can be far higher than inflation exceeding 2 respected macroeconomists at the brookings institution and ball argue for a sharply higher target of say 4 another sign that a recession may be underway is an inverted yield curve the spread between 10year treasury constant maturity and 2year treasury constant maturity bonds adjusted for inflation is still quite negative consistent with indicating a recession the may survey of business economists found most expected very modest growth with almost half expecting a recession by the end of the year so enough already fed do central bankers really need to see workers surrender before they stop hiking interest rates and risking recession