Halfway through a news conference Wednesday, the head of the world's most powerful central bank was asked a question weighing on the minds — and the checking accounts — of Americans everywhere:
When will people finally start getting meaningful pay raises?
Jerome Powell, the chairman of the Federal Reserve, had no satisfactory answer.
He called it a "puzzle." And then, as if measuring his words, he said he wasn't prepared to call it a "mystery."
Puzzle or mystery, the source of the consternation is this: The U.S. unemployment rate has dropped to a multi-decade low of 3.8 percent. A shortage of qualified people to hire has frustrated many employers who have complained that they can't fill job openings.
In theory, those two factors should combine to unleash a wave of robust pay raises for everyone from construction crews, teachers, accountants and hotel clerks to engineers, janitors, butchers, baristas and even summer interns.
It hasn't happened — not in most industries, anyway.
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Powell acknowledged that he couldn't say for sure why wage growth remains generally tepid. He said he "certainly would have expected pay raises to react more" to falling unemployment.
Echoing what other economists, including his predecessors and colleagues at the Fed, have suggested, Powell offered up one likely factor: the economy's relatively low productivity growth. Put simply, American workers aren't generating enough additional value for each hour on the job.
Some economists say companies have invested too little in capital equipment that would accelerate worker productivity. Others say earlier technological breakthroughs that did speed productivity have yet to be duplicated. But no one is sure.
"So it's a bit of a puzzle," the chairman mused, somewhat philosophically. "I wouldn't say it's a mystery. But it's, it's a bit of a puzzle."
Powell didn't explain his distinction between puzzle and mystery. But he has used similar formulations before. In 2017, as a Fed governor, Powell told CNBC that the persistence of inflation remaining below the central bank's 2 percent target after years of monetary stimulus was "kind of a mystery."
Yet in recent months, inflation seems to have picked up, driven by higher oil prices. Fed officials estimated Wednesday that inflation would run slightly above its target through 2020. That forecast appeared to suggest that low unemployment and a gaping federal budget deficit in the wake of President Donald Trump's tax cuts would finally keep inflation at or above the Fed's annual 2 percent target rate.
This newfound inflation is actually something of a challenge for many workers. After factoring in inflation, average hourly earnings have been flat for the past year, the Labor Department said this week. For workers who aren't supervisors, wages have actually fallen slightly despite the rush of hiring in an economic expansion on the verge of completing its ninth year.
What economists call the "Phillips curve" — which says low unemployment should accelerate pay growth — appears to be broken or twisted. Or at least operating on a severe delay.
Other economists have suggested answers that go beyond the Fed's mandate of using interest rates, asset purchases and public communication to stabilize prices and maximize employment. The liberal Economic Policy Institute released a study in 2016 showing that the long-standing decline in union membership had come at the expense of worker pay raises.
Other economists note that Americans have found themselves increasingly in competition with foreigner workers who earn less and that this factor has suppressed wages in some industries.
Separate research has that found higher wages are now concentrated at exceptionally profitable tech darlings like Facebook, where federal filings show median pay topped $240,000 last year. Workers at many less profitable firms are being left behind.
Then there's the issue of some workers being forced to sign non-compete agreements. And there's the rise of what economists call a "monopsony." That tongue-tripping term refers to industries or communities with just a few very large employers. Research has found that employers in such cases can limit pay growth because workers have few options to quit for similar jobs at rival employers.
On Wednesday, Powell ended his new conference with an answer to a question about whether most workers will see significant raises, given the money that major companies are pouring into stock buybacks rather than into pay.
The Fed chairman stressed that he still thought a strong job market would propel faster pay growth in time. Yet, he added, referring to companies that reward investors above workers, "we don't really have the tools that will address the distribution of profits and that kind of thing."
With those words, Powell left the lectern.