The Phillips Curve for those who are interested - which suggests that when employment levels are high, wage increases follow. And those wage increases feed through to higher levels of inflation. When unemployment is at record lows, as it is now, firms have to battle harder for the little spare labour that is left. To do that they have to offer higher wages, which increases business costs. Those costs are then passed on to consumers via higher prices.
Yet despite record high levels of employment, wage growth has actually eased in the last three months, down to 2.8% from 2.9%. We have not seen average wage increases of 3% since the summer of 2015. Some economists argue that a lack of bargaining power - union membership has been in long term decline - is leading to fewer widespread agreements on earnings increases. And fears over job losses has also led to fewer demands for rises. Zero hours contracts and hyper-flexible employment can work against collective bargaining agreements on earnings. The trade union wage gap, the difference in earnings of union members compared with non-members, is 16.9% in the public sector and 7.1% in the private sector (which employs well over 80% of people).
Some 80% of men are in work, the joint highest employment rate since 1991. And over 70% of women are in work, the highest employment rate since records began in 1971. That increase is down, partly, to state pension age changes which mean fewer women are retiring between the ages of 60 and 65.
For households it still means the economy is in a difficult place, leading to disillusionment with "the system" which is not providing.
Conor D'Arcy of the Resolution Foundation, puts it: "While the easing of inflationary pressures is helping pay packets to stretch that little bit further, there is still no sign of a long overdue pay rebound in Britain."
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