Federal Reserve press conference, 2018-03-21 — Chair Jerome Powell

Question (Nancy Marshall-Genzer, Marketplace): Nancy Marshall-Genzer with Marketplace. Does the interest rate hike today suggest that Americans are being paid enough? Are you satisfied with the rate of wage growth right now?
Answer: As I mentioned, you know, we’ve had unemployment decline sharply since, I guess, 2010, when it peaked at 10 percent and down to 4.1 percent now, and we’ve seen only modest increases in wages. So, on the one hand, what wages should in theory represent is inflation plus productivity increases. You should get paid for your productivity plus inflation. And productivity’s been very low. Inflation’s been low. So these low wage increases—in a sense, they do make sense in that—from that perspective. On the other hand, as the market has tightened, as labor markets have tightened, and we hear reports of labor shortages and we see that, you know, groups of unemployed are diminishing, and the unemployment rate is going down, we haven’t seen, you know, higher wages—wages going up more. And I would—I think I’ve been surprised by that, and I think others have as well. In terms of what’s the right level, I don’t think I have a view on what the right level of wages is, but I think we will—we will know that the labor market is getting tight when we do see a more meaningful upward move in wages.