If I were funnier, I would do a classic Johnny Carson call-and-response, “How hot is it” joke on the job market. “How tight is it? It’s so tight….” So tight that it’s at full employment? Well, that’s the debate. Goldman Sachs, for one, points to a host of factors suggesting the job market is beyond full employment. From GS:

This assessment rests less on the sub-4% unemployment rate—there’s nothing special about round numbers—than on the whole range of indicators that now signal a historically tight labor market, which also includes the underemployment rate U6, job openings, quits, skill shortages, and household job market perceptions. These signals refute the still-widespread belief in large amounts of labor market slack hidden in a depressed participation rate. Just to pick one example, it is all but impossible to reconcile that belief with the fact that the net share of US households—including both labor force participants and nonparticipants—who say that jobs are “plentiful” as opposed to “hard to get” now stands at +23pp, a full 10pp above the peak of the prior cycle in 2007.

Indeed, as the WSJ reports, “The number of unfilled jobs U.S. employers had at the end of March rose to a record high of 6.55 million, the Labor Department said Tuesday. There were just 6.59 million unemployed Americans that month, creating the narrowest gap between available jobs and those actively seeking work in nearly two decades of record keeping.” By the way, record keeping began in December 2000, when the job market was pretty tight with a 3.9% jobless rate just like today.

But if we are beyond full employment, then why is wage growth — at least as measured by average hourly earnings — so meh? (“High-pressure labor market producing little steam” is how a JPMorgan report puts it.) Again, GS:

First, month-to-month moves in AHE are virtually useless for inferring the overall wage trend, especially in months with sizable (and in this case negative) calendar distortions. Second, the 2.6% year-to-year rate of AHE growth—which currently coincides with the signal from our wage tracker composed of AHE and four other indicators—is not all that far below our best estimate of the full-employment nominal wage growth rate of 3%-3¼%, calculated as the sum of the Fed’s 2% inflation target and our assumed 1%-1¼% whole-economy productivity trend. It bears emphasizing that this estimate is about 1pp below the full-employment wage growth rate of a decade ago, owing to slower productivity growth. And third, while both year-on-year AHE growth and our wage tracker have gone sideways on net over the past two years, wage growth surveys among households and firms show a clear upturn over the past 6-12 months. Consequently, our wage survey tracker is now consistent with actual wage growth of 3¼% by early 2019 given the usual lags between surveys and hard wage numbers.

So maybe somewhat faster wage growth is coming, even if productivity growth isn’t necessarily. The case for patience is offered by economist Adam Ozimek:

Wage growth is right where you’d expect given wider labor market slack, as measured by the employment to population rate, but they aren’t growing fast enough to really celebrate. Inflation is firming up, but is just now reaching the Fed’s target after years of undershooting. And job growth is still going strong. The case for continued labor market slack is certainly harder today than it was a year ago, but given all of these facts there is still a very reasonable case to be made. Given the asymmetric costs, and given the consistent forecast errors on the side of being too pessimistic, the Fed and commentators everywhere should be more optimistic and consider that we have more room to improve.