Today let’s talk about the Federal Reserve’s “dual mandate” from Congress. It’s a phrase that gets thrown around a lot, so it’s worth unpacking.

The Federal Reserve Act of 1913 established the central bank as we know it today, and, later, Congress also charged (mandated, if you will) the institution to promote maximum employment as well as stable prices – thus, a dual mandate.

This has proven to be a difficult, if not impossible, task.

In 2012, for the first time in its history, the Fed established an inflation target. Even after trillions of dollars in quantitative easing and years of “ZIRP” (zero interest–rate policy) that target, 2%, is yet to be met.

The Fed seems perfectly happy with itself because the unemployment rate has fallen to historically low levels, now reportedly at 4.4%. Job creation seems to be moving at a healthy pace, but wages aren’t rising.

In fact, last Friday’s August jobs data only showed a 0.1% month-over-month increase in hourly earnings and meager 2.5% year-over-year gain.

There’s no getting around it: Wage growth was a disappointment once again.

And so the Fed seems confused (again).

The central bank links wages to lower-than-expected inflation. Over the last eight years, according to the Bureau of Labor Statistics (BLS), the U.S. economy has added about 12.2 million jobs. But a big assumption the BLS makes is the birth/death adjustment, which may have overstated job creation by nearly 50% since 2009.

The BLS model assumes an increase in new entrepreneurship and associated jobs. The BLS also fails to account for part-time jobs and contract jobs that replaced full-time jobs. Meanwhile, the labor force participation rate has been falling for the last 17 years and hasn’t been this low since the Carter administration. This statistic tells us how many people over the age of 16 have jobs.

Take a look at the chart below…