In March the Fed said it would consider other measures, including wage inflation, in charting its campaign. Ms. Yellen suggested she would like to see wages rising at a "normal" pace of about 3 or 4 percent a year.
Mr. Blanchflower and Mr. Posen see an easier answer. Instead of counting heads, policy makers can simply rely on market forces to do the work. Wage inflation, after all, is basically a summary of the balance between supply and demand. Employers raise wages as they find it harder to hire and retain qualified workers, so the market, in effect, is constantly judging the extent of labor market slack.
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"Unlike unemployment, the rate of wage inflation requires less judgment and is subject to less distortion by such factors as inactivity," the paper says. "Unemployment, underemployment of part-timers, long-term unemployment and participation rate reveal their nonstructural component by their influence on wage growth. And that is what the Fed should be trying to stabilize along with prices."
The main objection to this view is not about the accuracy of wage inflation, but about its timeliness. Wages generally are among the last prices to rise during an economic expansion. Prices, in particular, generally rise before wages.
To keep price inflation under control, Torsten Slok, chief international economist at Deutsche Bank Securities, warns that the Fed needs to begin raising interest rates well before wage inflation takes hold. Indeed, he contends the time has already come.
"If you want to hit inflation on the head, you need a Fed Funds rate that is above 4 percent, say 4.25 percent to create any pressure, and it will take you considerable time to get from zero to 4, and in the meantime you could see very substantial inflation," Mr. Slok said. "You could say that this is too early and we don't know quite yet, but I'm saying that if we run a risk, we run a risk of being behind the curve."
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While Friday's report showed no sign of wage pressures, Mr. Slok said that some alternative measures of wages had started to show an upward trend. "About a year ago or six months ago, there was no sign of wage pressure, but when you look at the data today, some of the measures are starting to point upwards," he said. "If it really is the case that there is so much slack, why are any of these indicators going up?"
But the greater concern about inflation, at the moment, is that prices are rising too slowly. The Fed's favorite inflation index rose just 1.1 percent in the 12 months that ended March 31, the government said on Thursday. That is well below the 2 percent pace the Fed considers healthy.
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Mr. Blanchflower and Mr. Posen have experience as central bankers — they served separately in recent years on the Bank of England's monetary policy committee — and they argue that the greater risk is in failing to do enough about unemployment, in part because that is also the best way to raise inflation back to a healthier pace.
"Pulling back too soon is worse than pulling back too late," Mr. Blanchflower said. "And we won't know what full employment is until we begin to approach it."