On Thursday, January 8, at 2:00 PM EST, the Federal Reserve Bank of New York will begin monthly publication of the Heise, Pearce, Weber (HPW) Labor Market Tightness Index, a new research product for measuring labor market tightness.
Good measures of labor market tightness are essential for predicting wage inflation and calibrating monetary policy. The HPW Index summarizes current wage pressures and forecasts near-term wage inflation based on the quits rate and job vacancies per job seeker. Unlike other similar measures, the HPW Index incorporates the behavior of both unemployed and employed workers—which is important since most new hires come from other jobs rather than from unemployment. In fact, over the past 35 years, the HPW Index was the most accurate univariate summary of wage growth when compared to a large range of other market tightness measures.
The HPW Index was first introduced through a New York Fed Staff Report and Liberty Street Economics blog post in October 2024. In conjunction with the upcoming launch, the New York Fed will publish a new Liberty Street Economics blog post updating the HPW Index and illustrating how the index and the quits rate are the best predictors of future wage inflation.
The HPW Index will be updated monthly at 9:00 AM ET on the business day following release of the Job Openings and Labor Turnover Survey data, and quarterly when Employment Cost Index wage data are released.
Press Call on the HPW Labor Market Tightness Index:
The associated economists will be available for a deep background press call on Thursday, January 8 at 1:00 PM EST to provide further context on the index. Journalists interested in participating should RSVP to Betsy Bourassa at Betsy.Bourassa@ny.frb.org.
