wage increases

Here is one thing everyone can be happy to hear, higher wages! In this CNN article economists are now predicting a raise in the average wage rate. The unemployment rate fell to 4.7 percent this Friday, the lowest level since July 2001, just before the Sept. 11 terrorist attacks. Now 65% of US workers say that they are considering looking for a new job. Economists are also saying that with the switch in job people can expect a 10% increase as part of the move. With the increase in wages companies are now worried about employees leaving. Forcing more company’s to be more generous with raises, and bonuses. This is a clear shift in demand. The market for labor has a higher quantity and a higher price do to this shift. The worry on Wall Street is that the raise in labor costs will lead to a pick up in inflation. What we think is a great wage increase is not as great as we think. What are some things the government can do to prepare for the pick up in inflation? Or is this problem just inevitable? Will it work it’s self out?