The new jobs report out Friday has some headline-making, disappointing news: After months of high growth, there was a slowdown in March. But beneath the surface, the report has some good news on wages. And there could be more to come.
The Bureau of Labor Statistics released a jobs report showing the economy added 126,000 jobs for the month of March. The number is drastically lower than February's number of 264,000—which was revised down from 295,000—and came in below economists' expectations. This leaves the official unemployment rate the same, at 5.5 percent.
"It shows growth is strong but moderating," Mark Zandi, chief economist at Moody's Analytics, said ahead of the release, predicting that the number would be around 200,000. Zandi told National Journal that the pace at which jobs were being added at almost 300,000 was unsustainable. "That's boom-like job growth."
The expectation is also drastically below Goldman Sachs' estimate of around 220,000. One of the biggest drops came in mining, which lost 11,000 jobs and has lost 30,000 jobs this year.
Zandi said a number of factors are affecting employment, including the energy sector laying off workers, bad weather in March, and the effects of a surging dollar on manufacturing and energy.
Meanwhile, hourly earnings saw a growth of 7 cents, which is higher than the 3 cents growth in February, but the rise was slightly undercut by the fact that nonfarm payroll hours declined 0.1 hours. More wage growth could be around the corner.
Jack Kleinhenz, chief economist at the National Retail Federation, had predicted some minor growth in wages in the jobs report, but he said it was a good sign that large companies such as Walmart, Target, and McDonald's have recently announced increases in their minimum wages.
"We are allowing the markets to work rather than have it imposed by government," he said, but noted that wage growth typically lags behind employment, which in turn lags behind GDP.
McDonald's made its announcement earlier this week, and wages will not start increasing until July 1, so the effect does not appear in March's job numbers. Even when the change is factored in, though, it will only apply to company-owned restaurants and not franchised restaurants, thus affecting about 90,000 employees, according to the company's estimate.
"Even a really large company that does something to raise the wages of its minimum wage has a very small effect on the overall number," Michael Madowitz, an economist at the Center for American Progress, said. "Even if the economy's picked up and people are hiring, because you have so many underemployed and unemployed, there has been little to no pressure on wages."
Meanwhile, Walmart's announcement will likely give 500,000 full-time and part-time associates a pay raise in the first half of the fiscal year; that is fewer than half of the company's 1.3 million U.S. employees the company says it employs.
Justin Wolfers, a senior fellow at the Peterson Institute, emphasized after the report's release that while there are "hints that wage growth may be picking up," there's a great deal of uncertainty. He tweeted that while wages had grown 2.2 percent in the past four months, they've risen 4.0 percent in the last 3 months.
Wage movements over the past few months are much harder to interpret. My guess: wage growth has risen to 2-1/2 to 3%, with huge uncertainty.— Justin Wolfers (@JustinWolfers) April 3, 2015
Madowitz wrote for the Center for American Progress that had wage growth kept up with the historical average, American workers would have seen a more than 5 percent increase since the Great Recession.
"You see people who are part-time or aren't looking right now; when they get the signal that there are jobs, they seem to have been coming," he said. "In the long run, it will be good for the economy."
Zandi said he expects wage growth to get stronger in the spring and summer.
"We are closing in on full employment," Zandi said. "You would expect wage growth to pick up."
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Eric Garcia is a staff correspondent for National Journal. He previously was a transparency reporter for MarketWatch, where he reported on financial regulation issues. His work has also appeared in the Southern Political Report, Salon, the American Prospect and the New Republic. He is a graduate of the University of North Carolina at Chapel Hill, and covered politics for its campus paper, the Daily Tar Heel.