Chart 18: Percentage of workforce by job type Agricultural Labourers  Telephonists and Telegraph Operators  Percentage of workforce  8  Percentage of workforce  0.6  7  0.5  6  0.4  5 4  0.3  3  0.2  2  0.1  1 -  Accountants Percentage of workforce  -  Hairdressers 0.8  Percentage of workforce  0.7  0.7  0.6  0.6  0.5  0.5  0.4  0.4  0.3  0.3  0.2  0.2  0.1  0.1  -  -  Source: Deloitte (2015)  22  0.8  BIS central bankers’ speeches  Chart 19: Share of unskilled workers in the UK, 1550–1849 Percent  Chart 20: Employment shares in US manufacturing, 1850–1910 45  Percentage point change in relative to 1850  White collar Skilled blue collar  40  15.0  Operative/unskilled  35  10.0  30  5.0  25  0.0  20  -5.0  15  -10.0  10  -15.0  5 155-Q99 1600-49 1650-99 1700-49 1750-99 1800-49  0  Source: de Pleijt and Weisdorf (2014)  1850  1860  1870  1880  1900  -20.0  1910  Source: Katz and Margo (2013)  Chart 21: Average real wages of unskilled building workers and GDP per capita, since 1270 Log scale, mean of 1270-1870=100  Allen Real Wages (Allen) Clark Real Wages (Clark)  320  GDP/cap GDP/cap 160  80  40  1270  1320  1370  1420  1470  1520  1570  1620  1670  1720  1770  1820  20 1870  Source: Broadberry, Campbell, Klein and van Leeuwen (2015); Clark (2005); Allen (2001)  BIS central bankers’ speeches  23  Chart 22: Change in employment shares, 2004 – 2014 Percent change in employment  5 4 3 2 1 0 -1  Managers, Professional Associate Skilled Process, Directors and Occupations Professional Trades Plant and Senior and Technical Occupations Machine Officials Occupations Operatives  Administrative Caring, Elementary Sales and and Leisure and Occupations Customer Secretarial Other Service Service Occupations Occupations Occupations  -2  Decreasing median pay  Source: ONS Notes: This chart shows the percentage point change in employment as a share of total employment.

Of course, there are alternative measures of inflation, such as the widely reported Consumer Price Index (CPI). The FOMC has set its inflation target in terms of the PCE Price index because relative to the CPI it covers a wider range of items that households consume and because it better adjusts for changes in the spending patterns of households. CPI inflation is currently around 2 percent. But CPI inflation generally runs three to five tenths of a percentage point higher than PCE inflation, and so the CPI’s performance should be measured against a higher inflation objective, such as 2-1/2 percent. So, an inflation gap remains for the CPI as well. Looking ahead, I am concerned about the possibility that inflation will not return to our 2 percent target within a reasonable period of time. First, recent monthly inflation numbers have been low, so there is not much upward momentum. Second, as I mentioned earlier, wage growth has been relatively low for some time. While wages don’t predict future inflation, the two often move together. So the subpar growth in wages we see today is consistent with continued subdued inflation. And, third, it does not appear as if inflationary expectations are exerting much of an upward pull on actual inflation at the moment. That said, I expect inflation to rise slowly over the next three years toward the FOMC’s 2 percent target.