Average hourly earnings held steady between May and June at $24.95 per hour, a paltry increase of 2.0 percent over June 2014. Annual growth of 2.0 percent is slow by any measure, but is certainly far below any reasonable wage target. In previous months, there had been some indication that wages might show signs of improvement, but this month’s disappointing report clearly illustrates that the economy has not tightened enough for strong wage growth.

Wage growth needs to be both stronger and consistently strong for a solid spell before we call this a strong economy. As shown in the figure below, nominal wage growth since the recovery officially began in mid-2009 has been low and flat. This isn’t surprising–the weak labor market of the last seven years has put enormous downward pressure on wages. Employers don’t have to offer big wage increases to get and keep the workers they need. And this remains true even as a jobs recovery has consistently forged ahead in recent years.

Given the continued slack in the economy, it’s unfortunate that the most effective policy lever at our disposal for generating a faster recovery–fiscal policy–has been pulled in the wrong direction for years now, with austerity dragging on growth over the recovery. The lack of prospects for any additional fiscal stimulus has only left us with monetary policy levers. Pressure is building on the Fed to reverse its monetary stimulus by raising short-term interest rates to slow the recovery in the name of stopping wage-fueled inflation. Today’s data provide further evidence that these rate hikes should not happen any time soon.