One key sign the job market is bouncing back

After years of watching the spoils of the economy go toward record corporate profits and higher stock prices, regular working Americans may finally have reason to be optimistic.

Federal data released on Tuesday provide additional evidence that the job market is strengthening by leaps and bounds. That should set the stage for higher wages, and perhaps even a shift in the balance of power from employers to employees in a way that hasn't really been seen since the late 1990s.

According to the latest Job Openings and Turnover Survey, or JOLTS, the number of job openings around the U.S. has risen for five straight months and is now at its highest level since 2001. The job openings rate (calculated as the number of openings as a percent of total employment plus job openings) increased to 3.3 percent -- that matches the high from the years immediately before the housing crash.

"This bodes well for a continuation of strong job growth in the U.S., which should feed into stronger wage growth over coming quarters," said Eric Green, head of U.S. rates and economic research, at TD Securities.

JPMorgan economist Daniel Silver believes that since the JOLTS data tend to lag most other measures of employment, all of this suggests additional gains in employment lies ahead.

A number of other measures points to a tighter labor market. There are know only two unemployed workers for every job opening, down from three to one in the fall and seven to one as unemployment was soaring during the financial crisis. The gap between job openings and payroll gains, particularly in the manufacturing sector, also suggests businesses are having a harder and harder time finding qualified applicants worthy of hiring. Meanwhile, the number of folks feeling confident enough about their employment prospects to quit their job has returned to more normal levels.

The real kicker is what's happening with the so-called Beveridge Curve, a measure of how well the job market is matching vacancies with hirable applicants. Right now, based on where the job openings rate is, the unemployment rate should be near 4.5 percent instead of just over 6 percent now.

What that suggests is that there are structural problems in the job market. Maybe the unemployed have lost too many skills or don't have the knowledge businesses are looking for. Maybe the right workers can't relocate to where the jobs are because of negative home equity, a lingering problem from the housing bubble. Maybe, as Baby Boomers continue to drop out of the labor force, younger workers aren't equipped to replace their older cohorts.

Whatever the cause, the result will be upward pressure on wages (the subject of my last article) as businesses compete for the dwindling supply of high-quality labor. Corporate profit margins could also come under pressure as less efficient, less qualified workers are hired and pull down labor productivity.

Over the long term, assuming the economic momentum driving this job market tightening continues, we could see the relationship between corporate profits and labor share of income normalize as wages rise and profit margins are pinched. Another possibility is that businesses try to pass through higher wage costs to consumers, which would result in a surge of inflation.

How the stock market responds to this is an open question and depends greatly on how the Federal Reserve responds. But all of this will be unquestionably good news for most Americans, who desperately need higher wages.