In response to a question about her personal labor market dashboard
So I have talked in the past about indicators I would like to watch or I think that are relevant in assessing the labor market, in addition to the standard unemployment rate. Certainly look at broader measures of unemployment. I mentioned U6 in my statement.
However, it is coming down as well as U3 (ph), it's moving in the right direction, and has moved even more recently than U3 (ph). Of course, I watched discouraged and marginally detached workers. The share of long term unemployment has been immensely high and can be very stubborn in bringing down. That is something I watch closely. Again, that remains exceptionally high. But, it has come down from something like 45 percent -- high 30's -- but that's certainly in my dashboard.
Labor force participation, I-- I do think most research suggests due to demographic factors, labor force participation will be coming down and there has been a downward trend now for a number of years. But, I think there is a cyclical component in the fact labor force participation is depressed. And so it may be that as the economy begins to strengthen, we could see labor force participation flatten out for a time as discouraged workers start moving back into the labor market, and so that's something I'm watching closely, and the committee will have to watch.
There are different views on this within the committee. And it's hard to note definitively what part of labor force participation is structural versus cyclical, so it's something to watch closely.
I've also mentioned in the past measures of labor market turnover. You mentioned quits. Remarkably, a large share of workers quit their jobs every month, usually going directly into another job, and I take the quit rate in many ways as a sign of the health of the economy. When workers are scared they won't be able to get other jobs, they show a reduced willingness to quit their jobs.
The final thing I'd mention is wages. And wage growth has really been very low. I know there is perhaps one isolated measure of wage growth that suggests some uptick, but most measures of wage increase are running at very low levels. In fact, with productivity growth, we have, and two percent inflation, one would probably expect to see on an ongoing basis something between perhaps three and four percent wage inflation would be normal. Wage inflation has been running at two percent, so not only is it depressed, signalling weakness in the labor market, but it is certainly not flashing. An increase in it might signal some tightening or meaningful pressures on inflation, at least over time, and I would say we're not seeing that.