The economic expansion has come with high corporate profits, but barely any wage growth. Now, markets are in a tizzy over a a recent bump up in wages. But Germany has an even tighter job market without higher inflation, and one measure of job market tightness — the number of people who quit jobs to take new ones — remains low.

MARY LOUISE KELLY, HOST:

Another tumultuous day in the stock market today – the Dow Jones industrial average shot up and down and up, finally ending 330 points higher. The wild ride began last week with the Dow plunging last Friday after the Labor Department reported a jump in wages in January. That report fueled fears that inflation was rising and that that might cause the Federal Reserve to raise interest rates. Some economists say the inflation threat may be exaggerated, as NPR’s Jim Zarroli reports.

JIM ZARROLI, BYLINE: If you talk to people like Chris Mortensen, you know how hard it can be to find workers these days. Mortensen owns Samaritan Tire outside Minneapolis. And he says he’s looked everywhere to find employees. He runs ads online. He hires recruiters. He even paid for an ad on the radio.

CHRIS MORTENSEN: That didn’t work very well. And if you put help wanted out there or now hiring out there in every area you can, we would get an average of maybe one person a week applying. And a lot of the people would not really necessarily be qualified.

ZARROLI: Mortensen says he pays well above minimum wage, and he’s willing to train people. And he says not having enough workers actually costs him business. He can’t serve as many customers as he’d like. The United States has been in a period of almost historic job growth. The unemployment rate is at a very low 4.1 percent. Economist Dean Baker, of the Center for Economic and Policy Research, says the tightening labor market is beginning to provide real benefits for workers.

DEAN BAKER: We’ve actually seen some wage growth at the middle and the bottom of the income ladder, and that’s a huge, huge deal.

ZARROLI: And Jason Furman, chairman of the Council of Economic Advisers under President Obama, says the U.S. has almost achieved that elusive goal of having a full-employment economy.

JASON FURMAN: If you look at the labor market employment data, it really looks like we’re there.

ZARROLI: But Furman says he is puzzled by the pace of wage growth. Wages spiked up at an annual rate of 2.9 percent last month. But if the job market were really tight, he says, they’d be even higher.

FURMAN: If a shortage is really bad, you’d pay that person something extra. It would be worth it for you. If a shortage is not so bad, you know, it’s a little bit more take it or leave it. And you don’t want to pay them extra to get there.

ZARROLI: Dean Baker adds that the proportion of people in the workforce is still lower than it was before the Great Recession, and it’s a lot lower than it was in the year 2000. And Baker says this is true across all ages and income brackets.

BAKER: It’s even across education levels. So to my view, that’s telling this story that there’s still slack there – people who would be interested in working who are not yet working.

ZARROLI: Why these people haven’t returned to the workforce is unclear. But Baker believes as long as there’s still some slack in the job market, the inflation threat may be less severe than it appears. And he believes it’s important for Fed officials not to overreact by raising interest rates too fast.

BAKER: There’s a lot of room for the labor market still to expand. I just think would be very unfortunate if, say, the Fed would try to counteract that by raising rates aggressively.

ZARROLI: As for this week’s turmoil in the stock market, he says, that may be less about the threat of inflation than a simple correction. Stock prices have been going up so fast for so long, that it’s natural for them to reverse course for a while. Jim Zarroli, NPR News, New York.

(SOUNDBITE OF LEMON JELLY SONG “THE STAUNTON LICK”)

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