This morning’s jobs report showed the economy added 257,000 jobs in January, and the numbers for December and November were revised upward. But even with the positive revisions to 2014 and the solid jobs growth last month, there’s clearly still tremendous slack in the labor market, as evidenced by lagging nominal wage growth. While January’s 0.5 percent jump in wages is a good sign, it’s important not to read too much into any one month, as there’s considerable volatility in the series. Over the year, nominal average hourly earnings have only grown 2.2 percent. From the figure below, it is clear the nominal wage growth has been hovering around 2 percent for the last five years.

It is also apparent from the figure that nominal wages have grown far slower than any reasonable wage target. The fact is that the economy is not growing enough for workers to feel the effects in their paychecks and not enough for the Federal Reserve to slow the economy down out of fear of upcoming inflationary pressure. If the Fed acts too soon, it will slow labor share’s recovery and come at a cost to Americans’ living standards. It is imperative that the Fed keep their foot off the brake for as long as it takes to see modest (if not strong) wage growth for America’s workers.