This Statistic Could Be Distorting How We Think About Inflation
Mui wrote that economists and policymakers are making too much of one widely followed statistic: the unit labor cost, which is supposed to represent how much business has to spend for labor to produce one unit of output. Rising unit labor costs are said to contribute to inflation.
“Claims about inflation rooted in unit labor cost arguments are trivial, tautological or unsupported by the data; they are the emperor that has no clothes,” wrote Mui, who is a senior economist at Employ America, a research and advocacy organization fighting for full employment.
