Unit Labor Costs Around The World

This measure is in some ways a better gauge of inflation than looking at consumer prices. You compare productivity growth to wage growth, and get an increase in “unit labor costs.”

I think the correct interpretation of this as applied to the natural resource exporters is that you dig up the easiest to dig stuff first, and so you suffer from diminishing marginal returns and falling productivity over time absent some awesome technological advances. At the moment, we’re not seeing any technological advances in the resource-extraction field that are awesome enough to make up for the diminishing returns.

Here in the good old USA, you see something of a paradox. Wages have generally lagged productivity for a long time in the United States. But right now amidst plummeting household wealth and massive unemployment, wages for the people who are employed are holding up relatively well.