Even though the majority of individuals still rely on selling their labor as their primary source of livelihood, the share of overall personal income generated from this type of work has steadily decreased. Interestingly, this is not a recent development but rather a long-term trend that dates all the way back to the 1960s. Beyond their regular wages, Americans today bring in a significant amount of money through investments, rental properties, and government transfers such as Social Security. This shifting dynamic implies that the standard tools used by the Fed to combat inflation could be losing their effectiveness. Simply put, trying to cool down the economy by enacting tighter monetary policy is far less successful when people possess a substantial amount of income that does not come from a traditional job.

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