WASHINGTON/FRANKFURT After injecting trillions of dollars into the global financial system over the last six years, the world's central bankers now face a vexing question: why is so little of it showing up in workers' paychecks?
From the U.S. Federal Reserve to the Bank of England, the Bank of Japan and the European Central Bank, slow wage growth is a major concern as central bankers continue to look for signs of a solid recovery.
The standing assumption has been that low interest rates would support growth, growth would translate into jobs, and tighter labor markets would lead to rising pay.
But the tepid pace of wage growth this far into the recovery "makes them very nervous," said Joel Prakken, a senior managing director at the Macroeconomic Advisers consulting firm, because it strikes at one of the foundations of developed world success: solid household incomes and consumer spending.
It is a tricky issue for central banks, which face the fact that monetary policy can do little if anything to directly create a job or raise a wage.
Policymakers can set monetary conditions to pull the economy out of a trough and keep credit flowing - and through those mechanisms their crisis response arguably helped keep tens of millions of people at work.
But as the recovery matures, the lack of wage growth in the developed world stands out as an area where loose monetary policy has generated underwhelming results.
Economists like Prakken, former Treasury Secretary Lawrence Summers and others have begun to debate whether much larger structural issues are coalescing to keep wages down.
A paper last year, co-authored by two Fed researchers, cited the globalization of supply chains as one potential factor, with manufacturing and some service businesses now subject to global wage competition.
Summers has used the term "secular stagnation" for what may be a permanent downshift in the growth prospects of industrial nations. In a paper last year he conjectured that a new, more sophisticated type of capital investment may lower the contribution of workers in the production of goods and services - and by implication limit wages.
Those concerns have heightened as the Fed and the Bank of England look to raise interest rates in coming months so they can leave the "zero lower bound" reached during the financial crisis. That ultra-low rate level makes policymakers nervous because it would tie their hands if crisis conditions recur.
For both Fed Chair Janet Yellen and BoE head Mark Carney, however, wage growth has become an anchor that could keep rates tied down. Yellen has said wage growth that keeps pace with both inflation and productivity is one of her key markers for a healthy labor market, and she has warned that anything short of that means household income, consumer spending and the economy overall would underperform.
Carney has tracked her language closely, noting in a recent parliamentary hearing that the lack of progress on wages "suggests to me ... that there has been more spare capacity in the labor market than we previously had thought."
In Japan, the mammoth stimulus program launched by the Bank of Japan - $2.2 trillion overall - has created only the first small signs of wage growth after a two decade battle with deflation. The massive stimulus and other aspects of the country's new economic policies have led to booming corporate profits. Officials now hope companies will share the fruits of that success.
In Europe, the ECB has faced a more complicated problem. A run-up in wages in places like Greece and Spain after the adoption of the euro led to a near crack-up of the euro zone, and arguably needed to be reversed.
The wage adjustment happened in a sharp and painful way, and it has now left the ECB battling a potential deflation as well. That has led the bank to offer banks hundreds of billions of dollars in cut-rate loans, even as concerns mount over the spending power of the average family.
Even the usually conservative German Bundesbank recently endorsed a healthy wage increase negotiated by the country's trade unions as "quite moderate" and in line with the country's economic performance.
Jean-Luc Schneider, deputy director of the economics department at the Organization for Economic Cooperation and Development, said he expects wage growth to pick up in developed economies over the next year as labor markets tighten.
Indeed, this week the National Association for Business Economics said the share of U.S. companies raising wages more than doubled in the three months to July from a year ago.
But until that catches on globally, central banks will remain on alert.
For the Fed and BoE in particular, "what is at stake when the decision is made about tightening policy rates is so big," that wage growth and the implications for overall demand will remain a concern, Schneider said.
(Reporting by Howard Schneider in Washington and Eva Taylor in Franfurt; Additional reporting by Leika Kihara in Tokyo; Editing by Bernard Orr)