At an almost nine-year low of 4.7% in May, the jobless rate was around the level that most Fed policy makers reckoned was equivalent to full employment when they released their last economic estimates in March.

As Yellen and her colleagues prepare for another policy making meeting starting Tuesday, they face a dilemma. Is the recent slowdown in jobs growth — payrolls have risen 116,000 per month since March, compared with last year's average 229,000 pace — mainly the result of dwindling demand for labor or of shrinking supply?

If it's the former, that argues for even more caution by the Fed in raising rates. If it's the latter, policy makers run the risk of eventually overheating the economy if they tarry too long in tightening credit.

In her recent speech, Yellen focused on the possibility that the recent downdraft in jobs growth portended a broader slowdown in the economy. Investors have taken that tack as well and don't see the Fed increasing rates this year, based on trading in the federal funds futures market.

The Labor Department reported on June 8 that job openings rose to 5.8 million in April from 5.7 million in March. That tied last July's results as the highest since records began in 2000. Hires, meanwhile, fell to 5.1 million, from 5.3 million.

That combination "suggests that firms may be having difficulty in finding qualified employees in a tightening job market," Maury Harris, chief economist at UBS Securities LLC in New York, and his team wrote in a June 8 report entitled "Has The Well Run Dry?"

Highly skilled workers have been in short supply for a while, with the jobless rate for those with a college degree or better hovering around 2.5% since the middle of last year.

"Among the more credentialed people like engineers, scientists and those in finance, if you want to work, you're working," Corona said.

And they're reaping the benefits. Bob Funk, chief executive officer of Express Employment Professionals, said he recently paid a newly hired accountant 20% more than his existing bookkeepers because the market is so tight.

Now it looks like it's the turn of the lesser skilled to profit from the stretched supply of labor. In the Fed's latest survey of the economy released on June 1, it said that business contacts in its Atlanta and Richmond regions were reporting that low-skill jobs were "becoming harder to fill."

"I have been in the management business for restaurants since 1987 in Atlanta and I have never seen it this tight, especially at the hourly level," said Robby Kukler, partner with Fifth Group Restaurants in Atlanta, which employs 800 people at a catering firm and eight restaurants, including South City Kitchen.

Hiring for "back of house" jobs such as dishwashers or cooks usually takes two to four weeks to find the right person, compared with one or two weeks five years ago, he said.

Pay Raises

"Wages have trended up 10% to 15% over two or three years, easily," he added.

Kierra Frazier, 22, is one of the beneficiaries of broadening opportunities. Her hourly earnings increased about 30% last year when she switched from selling clothing at a J.C. Penney Co. store to a job as a security guard at a building in downtown Chicago.

Frazier, who lives in the suburb of Dolton and hopes to one day get a college degree, said her pay at her new job has since increased to $11.85 per hour from $11.

"I was definitely surprised by the wage," Frazier said.

"The employee is now in control," said Becca Dernberger, an executive at ManpowerGroup Inc., the Milwaukee-based staffing company with $19.3 billion in worldwide revenue last year.

Some companies are responding by lowering their job requirements for applicants and being more willing to take on those who might need further training, said Dernberger, a vice president at Manpower. In some cases, that means not paying as much attention to gaps in resumes.

Others, though, are finding it hard to adjust to the new reality of the jobs market. "Companies aren't that willing" yet to raise wages for the harder-to-fill entry level jobs, Kelly Services' Corona said, adding, "it's a process that's going to take time" to play out.

The recent downshift in hiring is also a case of slackening demand, not just shrinking supply, Funk said. His Oklahoma City-based staffing company currently has about 14,000 positions open, compared with about 30,000 throughout last year.

"We're seeing a slowdown," agreed Richard Wahlquist, president of the American Staffing Association in Alexandria, Virginia. He pointed in particular to weakness in the manufacturing, and in oil and gas industries.

The downturn in energy, though, has proven to be something of a benefit for labor-starved construction companies as workers who left that industry for jobs in the oil patch return.

"A lot of folks are coming back from the oil and gas sector and that is a good thing," said Thomas Crane, chief human resources officer for Skanska USA Inc., which has about 11,000 employees.

Still, the New York-based building company is having to do a lot more than it has in the past to recruit and retain workers. And "it is not going to get any better," Crane said.

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