Since 2009, the economy has made considerable progress in recovering from the largest and most sustained loss of employment in the United States of America, since the Great Depression. More jobs have now been created in the recovery than were lost in the downturn, with payroll employment in May of this year finally exceeding the previous peak in January 2008. Job gains in 2014 have averaged 230,000 a month, up from the 190,000 a month pace during the preceding two years. The unemployment rate, at 6.2 percent in July, has declined nearly 4 percentage points from its late 2009 peak. Over the past year, the unemployment rate has fallen considerably, and at a surprisingly rapid pace. These developments sound encouraging, but it does not speak to the depth of the damage that has been done. T he ongoing problem of the economic recovery: jobs lost in the downturn are being replaced with lower-paying careers. Jobs created through the second quarter of 2014 (2Q14) paid an average of $47,171, which is 23 percent lower than the $61,637 average wage, of jobs that were terminated, during the recession. The Federal Reserve’s monetary policy objective is to foster maximum employment and price stability. However, the replacement of higher-paying jobs, with lower occupations, demonstrates how $93 billion in lost wages. In this regard, a key challenge is to assess just how far the economy now stands from the attainment of its maximum employment goal.

Judgments concerning the size of that gap are complicated by ongoing shifts in the structure of the labor market and the possibility that the severe recession caused persistent changes in the labor market’s functioning. Federal Reserve Chair Janet Yellen reports our economy is getting closer to the Fed’s objectives. Meanwhile, income gains are mostly going to those whose incomes are already high. Historical data confirms this. In 1975, the top 20 percent of households accounted for 43.6 percent of the nation’s income, while the working poor, who is represented by the bottom the 20 percent of households held just 4.3 percent. By 2012 the wealthiest quintile held 51.1 percent of the country’s income, and the bottom quintile just 3.2 percent. The wealthiest Americans (the top 5 percent of households) saw their income share rise from 16.5 percent to 22.3 percent. However, Janet Yellin understands that the labor market developments and their potential implications for inflation will remain far from perfect. As a consequence, monetary policy ultimately must be conducted in a pragmatic manner that relies not on any particular indicator or model, but instead reflects an ongoing assessment of a wide range of information in the context of our ever-evolving understanding of the economy. Economists across the United States of America are telling us that income inequality–not some fringe issue that just a few people want to talk about, but a real issue–is actually holding back the economy of the United States of America. We do not have time to wait.

Janet Yellin claims, the FOMC (Federal Open Market Committee from the Federal Reserve Board) has maintained a highly accommodative monetary policy in pursuit of its congressionally mandated goals of maximum employment and stable prices. The Committee judged such a stance appropriate because inflation has fallen short of our 2 percent objective while the labor market, until recently, operated very far from any reasonable definition of maximum employment. In real terms, the nation’s 2012 household median income of $51,017 stood at the lowest level since 1995. Median income peaked in 1999, at $56,000. In 2007, the national median household income stood at $55,627. But it has fallen every year since. When inflation is removed from the equation, median income fell 5.5 percent from 2005 to 2012. Consider first the behavior of the labor force participation rate, which has declined substantially since the end of the recession even as the unemployment rate has fallen. As a consequence, the employment-to-population ratio has increased far less over the past several years than the unemployment rate alone would indicate, based on past experience. And again, Janet Yelling claims, Over the past several years, wage inflation, as measured by several different indexes, has averaged about 2 percent, and there has been little evidence of any broad-based acceleration in either wages or compensation.

Indeed, in real terms, wages have been about flat, growing less than labor productivity. This pattern of subdued real wage gains suggests that nominal compensation could rise more quickly without exerting any meaningful upward pressure on inflation. And, since wage movements have historically been sensitive to tightness in the labor market, the recent behavior of both nominal and real wages point to weaker labor market conditions than would be indicated by the current unemployment rate. Meanwhile, from 2005 to 2012, the highest 20 percent of households captured 60.6 percent of income gains. Of that group the wealthiest benefited most, with the top 5 percent accumulated 27.6 percent of income gains. The numbers underscore what seems to be constant news these days: despite record levels of corporate profitability, American wages remain stagnant. That is one of several factors creating a growing income gap between the poor and the affluent: tax policy is another big one. Their findings contribute to the growing evidence that when we go back 30 years, we lost our way. Mistakenly Americans thought that tax breaks, to export jobs overseas, was the way to build this country’s economy, and it has turned American from producers to consumers, but someone was just interesting and creating a Billionaires club, at the expense of the American people, national security and human right. The report forecasts that income disparities will continue to grow, and that the middle class will continue to shrink.