The U.S. unemployment rate has fallen to just 3.7%, the lowest level since 1969. So it’s mission accomplished on the economy right?

Not exactly. There are several reasons a purportedly booming U.S. economy doesn’t feel like much of a boon to millions of American workers, chief among them the startling lack of wage growth many have experienced over the past four decades.

Speaking at a New York Federal Reserve conference recently, Susan Crandall, who directs the Center for Social Stability at the University of Massachusetts in Boston, laid out one especially compelling contrast: Since the 1970s, she said, CEO pay has surged 1,000%; during the same period, workers have only seen income gains of about 11%.

That long-term feeling of stagnation, which has robbed many middle-class Americans of the dream of a better life for their children, has also artificially depressed the labor market. Alongside a political war on unions, low wages have dismantled worker bargaining power and made employers greedier about how much they can squeeze out of individual workers, not through increased productivity, necessarily, but often via unpaid increases in work, such as long hours, weekend and holiday work, no time for time off — the new American way.

Unfortunately, a business- and bank-friendly mindset at the Federal Reserve, whose top officials spend a lot more time with their high-flying Wall Street and industry contacts than with workers and community leaders, deepens this imbalance.

Fear of success

Look no further than the frightened, cowered tone with which Fed policy makers have tended to address the prospect of achieving full employment, almost like cardinal sin sure to be punished by the inflationary gods always lurking just around the corner, rather than one half of the central bank’s congressional mandate.

Raphael Bostic, president of the Atlanta Fed, captured the awkward messaging in a recent blogpost titled “On Maximizing Employment, a Case For Caution.”

Bostic argues the Fed should be leery of running a “high-pressure economy” because it might force the central bank to tighten monetary policy more quickly and to a greater extent down the line in order to fight inflation.

However, the post does not make an especially convincing case that the policy errors that followed the so-called high-pressure periods identified by Bostic (which are high-pressure for companies, not for workers, belying Fed policy makers’ perspective on the economy) were not simply the result of the Fed’s own built-in anti-jobs bias.

That is, because of the Fed’s proximity to its business contacts, it tends to think of workers as labor costs (not investments in human capital) and wages as inflation (not improvements in standards of living). This colors the Fed’s definition of “full employment,” making policy makers easily swayed by dubious claims from business executives about chronic labor shortages — made without any contention about why wages are not rising on a sustained basis.

So what about the other half of the central bank’s mandate: low and stable prices? Check. U.S. inflation has undershot the Fed’s official 2% target for much of the economic recovery, a sign of underlying economic softness and a reflection of the aforementioned lag in workers’ wages. In the most recent personal income data, the wages and salaries component rose just 0.2%, which was the smallest gain since October 2017.

Fed Chairman Jerome Powell, a former private-equity executive, sounds downright jubilant about the outlook: “Our economy is in such a good place right now,” he said during a Q&A event last week. Last month, he said things were “remarkably positive,” “extraordinary,” and “particularly bright.” For Powell, this appears to justify further interest rate increases well into next year, maybe into 2020.

Yet the Fed waited for stocks to skyrocket for several years before it even began consider raising rates from zero, where it had left them for seven years. Couldn’t it just wait for workers to see some of that GDP dividend in their paychecks before worrying about the economy running too hot?