It remains our biggest economic enigma: Sluggish wage growth despite low unemployment.
In a robust job market, pay rises as the supply of available workers shrinks. At least thatís the way it normally works.
This time around, the ingredients appear to be there. The economy has expanded for at least 106 consecutive months, the nationís second longest streak. And strong monthly job growth has helped drive the national unemployment rate down to a pocket-sized 3.9 percent.
Still, you need a magnifying glass to find much growth in the average workerís paycheck.
In the nine years since the Great Recession, year-over-year wage growth has not once reached 3 percent. After the dot-com downturn ended in 2001, it took just four years to break through that threshold, and shortly thereafter it hit 4 percent, according to the Federal Reserve Bank of Kansas City. In Florida, unemployment hit an 11-year low last month, but the average hourly wage ticked up just 7 cents compared to a year ago, according to job numbers released Friday. The state still lags the country in earnings growth and overall pay.
The gut punch: Inflation has eaten much of the anemic increase.
The wage-growth riddle has spawned many potential explanations but little consensus. Every theory seems to have doubters.
"The prolonged period of lackluster wage growth has been one of the biggest mysteries coming out of the Great Recession," said Karl Kuykendall, a principal economist with IHS Markit. "Itís due in part to the fact that there isnít a one size fits all answer."
What might be going on?
One theory: The expanding economy and its steady job growth has lured a lot of people back into the workforce who were sidelined for years. These returning workers, no matter their age, generally earn less. Theyíve got a job, which is good. It just doesnít pay that well, so they bring down the average.
The huge swath of higher-paid baby boomers retiring and being replaced by workers with lower wages contributes to the effect.
"With so many (boomers) still approaching retirement, the so called Silver Tsunami will continue to be a drag on aggregate wage growth for some time," concluded the Federal Reserve Bank of San Francisco.
Another factor: Scarred by the previous recession, some businesses are reluctant to raise wages for fear they might have to cut them if the economy sours. Cutting wages is a morale killer and makes it hard to hang on to good employees.
Instead of raises, more employers are offering perks like additional retirement benefits, free lunches, flexible schedules and more paid time off, which donít always show up in wage data. They are also absorbing more health care costs, which leaves less money for wages.
"This is a big factor. Companies are providing a lot more non-wage benefits," said Mark Vitner, senior economist at Well Fargo. "Health care is soaking up a lot of it."
Itís also possible that the rosy job figures arenít so rosy. Sure, unemployment is low. But a lot of people would like to work more hours or are moving in and out of the workforce more often than they want. These underemployed and discouraged workers donít always show up in the headline numbers.
They provide what economists call "slack" in the workforce. In other words, the tight labor pool isnít as tight as the 3.9 percent unemployment rate would suggest. Employers have more hiring options, which means less pressure to raise wages.
"I donít think that tells the whole story, but I think itís a piece of the puzzle," Kuykendall said.
The evolving labor market, one in which workers have less power, also plays a role, though how much is up for debate. The globalized economy has made it easier for American businesses to find cheaper labor, whether it be auto manufacturers shifting from Detroit to the South or electronics makers setting up in China or Vietnam.
In addition, the Internet has given consumers a lot more choices and has made it easier to price shop. That makes it harder for companies to readily recoup labor costs by raising prices.
Teresa Ghilarducci, a former economics professor at the University of Notre Dame who now works at the The New School in New York City, put it bluntly:
"Consumers and shareholders won; workers lost," she wrote for The New Schoolís Retirement Equity Lab.
Ghilarducci pointed to several factors including how super firms like Facebook, Apple, Amazon, Netflix and Google have tremendous market power, which can keep prices down, but also keeps wages low. She and others have pointed out that many of the fast-growing jobs like home health aides and fast food cooks donít pay well.
The decline of labor unions, and their ability to demand higher wages, provides some possible clues. The share of American workers who belong to a union fell to 10.7 percent last year, down from 12.4 percent before the recession and above 20 percent in 1983, according to the Bureau for Labor Statistics.
Mark Hamrick, senior economic analyst at Bankrate.com, described the trend as a big part of why wage growth remains sluggish nationwide, though not as much in Florida where unions rarely dominated.
"It speaks to the broader issue of wage earners having very little bargaining power," he said.
Alas, not everyone agrees. Vitner, for one, isnít buying it.
"The argument doesnít really make a lot of sense because unions have been dwindling for some time and wage growth has gone up and down during that time," he said. "If it was a major factor, the trend would be more consistent."
So what are the prospects for wage growth?
Florida created an impressive 27,400 jobs in July and the unemployment rate fell to 3.7 percent, according to data released Friday. In theory, if unemployment keeps tumbling and the underemployed find more hours, weíll hit a point where more employers feel pressured to raise wages. Thatís already happening in some hot industries, including construction and transportation.
Consumer surveys indicate that workers are increasingly confident that their pay will rise. And ongoing campaigns to increase the minimum wage in some states could boost average pay next year.
"I think we will see some wage growth in the coming year," Vitner said. "The mix is becoming more favorable."
The futureís not all bright. The stateís massive tourism and hospitality industry is full of low paying jobs. As the industry grows, those jobs bring down the overall average wage. Same goes for some of the faster growing parts of the health care sector like medical and nursing assistants, which pay less than $30,000 on average.
Nationally, the economy is expected to slow in 2019 and potentially stall in 2020. Construction might already be close to peaking and increasing trade tensions has manufacturing in a bit of limbo.
Time could be running out for those waiting for fatter paychecks.
"There is a real risk that we get to the end of this economic expansion without substantial wage growth," Hamrick said.
Contact Graham Brink at [email protected] Follow @GrahamBrink.