(Bloomberg) — Wage growth is on fire.

The Atlanta Fed's Wage Growth Tracker indicates that the median U.S. worker saw pay rise by 3.9% year-over-year in October, the fastest rate of growth since November 2008.

This number comes on the heels of October's non-farm payrolls report, which showed average hourly earnings increasing at the fastest annual clip of this current expansion, a sign that the economy is getting close to full employment.

Federal Reserve Bank in Atlanta.
Federal Reserve Bank in Atlanta.

The Atlanta Fed's wage metric tracks the incomes of individual workers over time, and as such is not prone to the composition effects — like the exit of higher-paid baby boomers from the labor force — that have weighed on the usual measure of average hourly earnings this cycle.

"Average hourly earnings are more susceptible to compositional and demographic changes in the labor force, while the tracker is comparing the wages of the same individuals over time, providing a unique insight into wage growth," says Bespoke Investment Group Macro Strategist George Pearkes. "That growth has been strong and accelerating recently despite very modest inflation and some remaining underemployment."

Wage growth among college-educated employees also outstripped the headline figure — something it hasn't done for the most of the past year — demonstrating that wage pressures are broadening to the upper end of the income spectrum, which has been noted by economists like Macquarie Capital Markets' David Doyle.

Another sign of labor market tightness? Job switchers are seeing wage growth far faster than people who stay in their current position, at 4.4% and 3.6% respectively. Meanwhile, the share of the unemployed who quit their jobs has also hit a cycle high of 12.1% in October. Those job leavers are confident they'll be able to procure another position at better pay in short order — and with good reason, according to the statistics.

"Today, there is some risk that wage growth is galloping higher as opposed to gradually moving higher," concludes Neil Dutta, head of U.S. economics at Renaissance Macro Research.

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