The NYT notes that the new jobs being created in the upturn tend to be low-paying jobs. This is not surprising. The jobs that are created in large part reflect the state of the labor market. No one will work the midnight shift at the local 7-11 for the minimum wage if they have the opportunity to get relatively good paying jobs in manufacturing, construction, or health care.

High unemployment leads to lower wages for most workers both by lowering the wages in their jobs and leading to a mix that has more lower paying jobs than would be the case if the economy was near full employment. (This was the point of my book with Jared Bernstein, The Benefits of Full Employment.)

High unemployment tends to have less effect on the most highly educated workers since few doctors and lawyers are laid off when the economy goes into recession. (Although this downturn may have had some downward effect even on the wages of lawyers.) This is why macroeconomic policy has to be very much understood as a class biased policy. When the ineptitude of the Fed allowed the housing bubble to grow to incredibly dangerous proportions, it was the livelihoods of tens of millions low and middle-income workers that were being put at risk, along with their savings, which were overwhelmingly in their homes.

In the same vein, the Fed's new commitment to target 2.0 percent inflation, implicitly at the cost of higher unemployment, is a promise to throw low and middle class people out of work in order to put downward pressure on their wages to keep inflation from rising above its target level. The impact of this policy is likely to dwarf the impact of federal tax policy in its impact on most non-rich Americans.