What's going on?

Jobs and wages in America are both on the up, but higher pay packets are beginning to chomp into companies� bottom lines.

What does this mean?

More jobs means less unemployment, which is good for workers as they�re hot property. This, in turn, means companies have to offer more money to steal them from their current jobs. However, what�s good news for workers is bad news for companies right now: they have to shell out extra dollars for staff, but they�re struggling to raise their prices (more below) to cover the cost. Without more cash coming in, wage increases are coming straight out of companies� profits.

Why should I care?

For markets: Industrials are getting squeezed on both ends.

In the industrials sector � which includes machinery, construction and aerospace (and Nine Inch Nails) � labor costs are 21% of companies� revenue, on average. If wages rise more and prices don�t increase, that number will go up � which means less profit for those companies. The sector�s facing a double whammy since it�s also being hit hard by trade tensions and tariffs � contributing to the rising cost of some of the goods needed to make their products, like steel and aluminum.

The bigger picture: It�s a workers� market.

In June, average hourly wages in the US increased by 2.7% from the same time last year, which was pretty much on a par with inflation (the rate at which the price of goods rises � consider what a movie ticket costs now compared to ten years ago) at 2.8%. This means workers aren�t actually getting more bang for their buck from their higher wages � so they don�t necessarily have more spare cash to cope with price increases. The result: companies have been reluctant to raise prices, fearing lost sales � potentially to Amazon. Some businesses are already struggling to find workers, and some workers are taking advantage of the situation, job-hopping in search of higher wages.