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A Kink in the Phillips Curve? Wall Street Economists Are Divided

  • Both average hourly earnings and employment cost index are up
  • As pay heads higher, unemployment-inflation tie takes focus
Job seekers wait in line to speak with representatives during a Choice Career Fair in New York.

Photographer: Mark Kauzlarich/Bloomberg

After a decade-long drought, America’s employers are making it rain.

Hourly earnings moved above 3 percent in the year through October for the first time since 2009, last week’s jobs report showed, and the employment cost index is perking up. Analysts say the pickup will last because low unemployment should theoretically spur higher salaries and because anecdotal evidence suggests companies are starting to pay up. That leads to a key question: Will companies hike prices more rapidly to cover their rising labor costs?