Are labour markets in the rich world too tight?

LAST MONTH Jerome Powell, the chairman of the Federal Reserve, identified the most uncomfortable trade-off in economics. “Today’s labour market”, he said at a press conference, is “tight to an unhealthy level”. In most places and at most times a fall in unemployment, or a rise in the number of people in work, is welcome. But labour markets can become too strained, creating worker shortages that stop production and cause wages to spiral, which can feed into overall inflation.Mr Powell fears that America has crossed the threshold from good-tight to bad-tight, one reason why the Fed is signalling that higher interest rates are on the way. Increasingly, though, labour markets elsewhere in the rich world are also straining at the seams.