Workers in America have made some strides over the last few years, but unfortunately the road to real and lasting economic security remains long. With a debt ceiling crisis poised to potentially crash the global economy, and the Federal Reserve willing to push millions of Americans out of work to combat inflation, there’s a lot of work to be done to ensure that the gains of the last several years are preserved and expanded on.

According to a report released last week by the Bureau of Labor Statistics, wages and salaries for workers across the country rose 5% between March 2022 and March 2023. This is encouraging in light of the fact that inflation also rose 5% over the same period. For months on end, rising prices for essentials like rent, gas, and groceries wiped out any and all wage gains that workers received. Now, they’re at least breaking even.

What makes the news even better though is that, out of all American workers, low-wage workers are enjoying the greatest gains in their paychecks. According to a report from the Economic Policy Institute, the lowest paid workers in America experienced a 9% growth in real hourly wages between 2019 and 2022. Moreover, employees in the historically underpaid leisure and hospitality industry – e.g. hotel clerks, bartenders, restaurant servers, etc. – did particularly well.

We think it’s important to recognize these sorts of advances for workers, particularly in such trying times. However, we also think it’s equally important to keep things in perspective. This month’s “good” wage news is that workers are breaking even – certainly an improvement over recent setbacks, but hardly something worth celebrating. We need to both appreciate how much progress remains to be made on wages and identify the roadblocks that lie ahead in achieving this goal.

In 2019, MIT estimated that the living wage – the wage needed to afford basic necessities – was $16.54 per hour for a family of four (two working adults, two children) in the United States. Adjusted for inflation, that wage would now be $19.64. Unfortunately, even with their recent gains, many workers around the country are not meeting the mark here. The bottom 10% of earners in America are earning just $12.57 an hour. Nearly a third of the country – 52 million Americans, a disproportionate number of whom are women and people of color – are making less than $15 an hour. Nowhere in America does a worker earning the minimum wage make a living wage. In short, no matter how far workers have come, there’s still a long way to go on the wage front in America.

We’d love to say that the length of the road to wage equity is the only issue here, but unfortunately, it’s not. A major roadblock lies ahead for workers wanting to improve their lot, and its name is the Federal Reserve.

Economists at the Fed see recent spikes in wages differently than we do. While we welcome wage growth, especially for low-income workers, the Fed looks at things through the lens of inflation and wage-price spirals. The traditional thinking goes: as wages climb, workers will have more money to demand more products, which will push up prices, which will push wages further and create a vicious inflationary cycle that the economy doesn’t have the capacity to handle.

The Fed works to cool inflation by raising interest rates. Over the past year, the central bank has raised interest rates nine times, with rates now ranging between 4.75 and 5 percent. (Officials are meeting again this week and are expected to raise rates again.) By raising rates, the Fed aims to slow the economy by making borrowing – on everything from credit cards, mortgages, and car loans – more expensive for workers, which will cool demand by leaving them with less disposable cash to spend elsewhere.

We do not think that raising interest rates is a prudent path to take in fighting inflation. It does eventually cool demand and slow inflation, but only at great cost to those already bearing the brunt of rising prices. Millions of households have been suffocating under the weight of inflation and they need deliberate help from the government, not deliberate harm.

We also think that raising interest rates is a sorely misguided strategy because it doesn’t do anything meaningful to address a critical cause of our current bout of inflation: corporate price-gouging.

Historically, inflation has been driven to a large extent by wage-price spirals, but that’s not the case today. According to one analysis, just 7.9% of the recent increase in consumer prices can be attributed to higher labor costs, i.e. wage increases. On the other hand, over half – 53.9% – of price hikes can be attributed to fatter corporate profit margins. Corporations have used the widespread hype over inflation as an all-too-convenient excuse to raise prices on a variety of products and services, and it’s certainly paid off: household names like McDonald’s and ExxonMobil are literally doing better than ever and corporate profits have reached a 70-year high.

For these reasons, the Fed must immediately stop their rate hike campaign and let Congress step in. Congress needs to act on behalf of workers and give them deliberate help. They need to lock in recent wage gains and help clear the path for further wage growth. They need to raise the federal minimum wage, which has sat at a deplorable $7.25 an hour since 2009, to a livable wage (which now means even higher than $15 an hour). They need to strengthen and enforce labor standards, like those that prevent companies from exploiting child labor. They need to strengthen and protect workers’ rights in forming unions.

Congress also needs to take direct action in the fight against inflation by going after price-gouging corporations. They can institute windfall profits taxes on offending companies and industries, like Senator Sheldon Whitehouse and Representative Ro Khanna have proposed with their Big Oil Windfall Profits Tax. They can also enforce stricter rules on antitrust violations and even, if necessary, institute price controls.

We’re happy that workers have made some gains in recent years, but it’s nowhere near enough. With so much work still to do, there’s no time for a victory party. We’re going to roll up our sleeves and get right back to work in the fight for economic justice in America. And we’ll continue to push Congress to do the same and implore the Fed to get out of the way.