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This has puzzled economists, as a tight labor market typically lifts wages because it increases the demand for workers. The Fed has . It could also be because a majority of workers aren’t getting raises, . Other measures are equally as bleak. Employee pay and benefits as a percentage of global domestic income has declined for four-straight quarters, using figures from the Department of Commerce. That stood out to Neel Kashkari, president and CEO of the Federal Reserve Bank of Minneapolis, who that it may mean the Fed isn’t as close to full employment as it thinks. Fed officials have said that the economy is near full employment, while various contacts across the central bank’s 12 districts have voiced difficulties in finding enough people to fill vacant positions, according to , known as the Beige Book. “I always ask the same question to the chair of the Federal Reserve Board, which is: When does America get a raise?” Heck told Powell during his testimony. “We have a need to place a further emphasis on wage growth.” Heck acknowledged that wage growth has been picking up, while also praising the Fed’s newfound attitude of patience. But he also urged Powell that the Fed should consider wage gains in addition to its dual mandate of inflation and full employment. There’s a relationship between wage growth and price stability, Heck said. Inflation has also remained tepid throughout the current economic expansion, holding just below the Fed’s 2 percent objective. The Fed is currently reviewing its inflation objectives and looking at ways to “more credibly achieve” that goal, Powell told members of Congress during his testimony. Powell didn’t provide any specific comments about wage gains or how big of a priority it will be for the U.S. central bank, but he mentioned that productivity growth is a long-term challenge for the economy, which is on track to hit its longest expansion on record come July. “Our nation faces important longer-run challenges,” Powell said. “For example, productivity growth — which is what drives rising real wages and living standards over the longer term — has been too low.” Learn more
SHARE: Sarah Foster covers the Federal Reserve, the U.S. economy and economic policy. She previously worked for Bloomberg News, the Chicago Tribune and the Chicago Daily Herald. Brian Beers is the managing editor for the Wealth team at Bankrate. He oversees editorial coverage of banking, investing, the economy and all things money. Related Articles