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How your bum paycheck is helping the Federal Reserve

As price pressures build in the U.S. economy, the Federal Reserve is likely to have a more difficult time justifying its ultra-easy interest rate stance.

But here's one suggestion: The central bank simply could use the moribund state of wage inflation, as opposed to general prices, as its justification to keep short-term rates extremely low for a prolonged period of time, according to an analysis from Goldman Sachs.

"Increased emphasis on wage inflation can be beneficial even when there is no uncertainty around the amount of slack in the labor market," Goldman economist Sven Jari Stehn wrote this week in an analysis for clients. "The intuition is that wage inflation normalizes more slowly than price inflation ... and focusing on wages might thus be a way to introduce a 'low for longer' commitment into policymaking."

While the Fed unwinds its monthly bond-buying program known as quantitative easing, keeping interest rates low will remain the centerpiece of its efforts to steer the economy back to recovery.

Andrew Harrer | Bloomberg | Getty Images

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The rates have allowed companies to boost their operations—and share prices—with practically free money while also allowing the government to finance the $17 trillion national debt. Firms collectively have bought back more than $1 trillion of their own shares, and low Treasury yields have helped the federal government contain debt service costs.

Low rates, however, have produced an uneven recovery: Stock prices have zoomed and employment has grown, but wages have lagged. Over the past 12 months, average hourly earnings have risen just 1.9 percent, well below the 2.5 percent benchmark for the wider inflation picture the Fed has set before it will consider raising rates.

Stehn asserts that the Fed can gauge whether its "job is net yet done"—words Chair Janet Yellen used in a March speech—by following wage growth, which in turn can be used as a good proxy for how much slack there is in the labor market.

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In previous analyses, Goldman economists have recommended the Fed also more closely follow the "real" unemployment rate, or the one that also includes those working part time for economic reasons as well as those who have quit looking or jobs altogether.

That rate—the "U6" in government parlance—is currently 12.3 percent, or nearly double the 6.3 percent that the government uses when it releases the monthly jobs count. (The next release comes Friday.)

Though the Fed is not without its hawks when it comes to interest rate policy, the general tendency has been toward a dovish stance, with Yellen and other top officials stating repeatedly that rates will stay low essentially for as long as it takes to get the economy back to what they consider safe footing.

Their yardsticks for measuring when rates should go up have proven faulty, though. The Fed previously had set a 6.5 percent unemployment rate as one of the two points to consider, but a generational low in labor force participation forced the Open Market Committee to abandon that position.

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Likewise, a continued surge in prices could force the Fed's hand away from its previous 2.5 percent inflation target.

But with little to indicate that salaries are rising, using wages rather than broad-based inflation would help bolster the Fed's low-rate policy.

"We conclude that a focus on wage developments would likely be beneficial for Fed policy," Stehn said. "This is a strong argument for a continued accommodative stance as current wage growth remains stuck at only 2 percent."

—By CNBC's Jeff Cox.

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