Unit Labor Costs

Unit labor costs are basically wages minus productivity. It's the price of labor's output rather than the price of labor.  This is a good measure of inflation and it tracks the CPI fairly well even though it is a very different statistic. 
The Economist: 

the OECD released their quarterly “Unit Labour Costs and Related Indicators”. ...Costs were generally rising in the second quarter, but were up sharply in Norway and Australia. Why does this matter?

Unit labour costs are the best estimate of staffing costs faced by firms. They represent the amount of money needed to pay your staff to make one unit of output, one widget. This is a function of two elements, the cost of the staff—their hourly wages—and the speed at which they make widgets, their productivity. Expressed in growth rates unit labour costs are roughly equal to growth in wages minus the growth in labour productivity, per widget. In America, in the second quarter, unit labour costs increased by 0.8%, this consisted of a 1.0% increase in wages and a 0.2% increase in labour productivity.

The rise in unit labor costs indicates the level of  inflation in America. 

Normally, and especially now, this is not a concern; a little bit of inflation is better than a little bit of deflation. [Most countries] display similar trends.
Contrast that with the situation in Norway and Australia, where rising wages and falling labour productivity are generating unit labour cost increases above 5%. This is indicative of a tight labour market; firms are forced to increase wages to hold onto workers and must occasionally employ lower skilled workers than they'd prefer, leading to decreases in average labour productivity.
So what's up with Norway and Australia? Both economies are heavily dependent on natural resources. Unlike manufacturing jobs, natural resource industries aren't susceptible to offshoring when labour costs soar. You have to mine coal where the coal is.

Menzie Chinn:

The interesting trend since 2001 has been the rise in [price markup over unit labor cost.]

Source: Economic Report of the President, 2012.From this graph, one would be hard pressed to find American business in terrible shape. Productivity has increased, labor compensation growth has been modest, so that it’s obvious where profits have come from. This also means (to me) that there is substantial space for rising wages to be absorbed without a commensurate wage-price spiral.
As I noted in this recent post, rapid productivity growth combined with slow compensation growth has improved American competitiveness. Nominal dollar depreciation over that period emphasized that improvement.