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What does March’s job market slowdown mean for wage growth?

There was a bright spot in Good Friday's disappointing jobs report that revealed the number of jobs added fell well below expectations: Wages, stuck for so long, are finally starting to go up. The Wall Street Journal's Eric Morath joins Hari Sreenivasan from Washington to discuss.

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  • HARI SREENIVASAN, PBS NEWSHOUR WEEKEND ANCHOR:

    There was a bright spot in yesterday's otherwise disappointing jobs report: wages, stuck for so long, are finally starting to go up.

    For more about this, we're joined now from Washington by Eric Morath of "The Wall Street Journal".

    So, is this truly a bright spot in an otherwise pretty bleak report?

  • ERIC MORATH, THE WALL STREET JOURNAL:

    Well, the report certainly was bleak, and we're starting to see, though, the first signs possibly of stronger wage growth. We still have quite a ways to go before we can declare it's a breakout, but there's been some other news around wages that is also brightening outlook.

  • HARI SREENIVASAN:

    You know, we've been seeing these stories of companies like Walmart or McDonald's announcing planned wage increases. Is that likely to have an impact on the overall economy considering the number of low-wage workers there are?

  • ERIC MORATH:

    Yes, I think it will have an impact in pockets of the economy. Keep in mind, one of the fastest growing areas during this recovery has been restaurant jobs, and not too far behind that has been retailers. A lot of folks have taken up employment in these fields, and so now that we might be seeing some wage growth by the leaders in those areas, that could translate into better consumer spending.

    But it might not have a huge impact on the overall wage growth, because you have to keep in mind — these are low-wage jobs, often $8, $10, $12 an hour.

  • HARI SREENIVASAN:

    And how does that compare with what the cost of living or the consumer price index is these days?

  • ERIC MORATH:

    Well, one good note, wages have been growing 2.2 percent over the past year, according to yesterday's jobs report. At the same time, consumer prices, thanks to falling oil, has been barely moving ahead at all. So, these wage increases should feel real to consumers. So, it is a help.

  • HARI SREENIVASAN:

    OK. And then how does this fit in this larger picture? You mentioned the price of oil. When the price of oil goes down, people feel like they have more money in their pockets. Is that the reason they go out to restaurants, and that's the reason restaurants have to hire more workers. I mean, how does it all connect?

  • ERIC MORATH:

    Yes, there's definitely a connection there. Restaurants have been one area, one of the few areas within consumer spending that we've really seen strong growth with the fall in oil prices. It hasn't quite translated to other areas like your general merchandise stores yet. So, that's connection, that people feel a little bit better and maybe they go out and spend.

    But the consumers are still cautious. We are seeing the highest savings rates in several years, and we've seen, since the holiday season, not particularly robust overall consumer spending. So, I think there's still a sense that, you know, after the deep recession, people just aren't willing to open up their wallets quite as far.

  • HARI SREENIVASAN:

    And then how do these numbers about wage increases connect to this overall job creation report because this is all the jobs that are created, not necessarily just low-wage jobs, right?

  • ERIC MORATH:

    Oh, that's right. So we had been seeing a quite robust job growth before March, the previous 12 months. We'd seen the strongest job creation on a monthly average since the 1990s.

    So, certainly that was quite strong. We had a step-back in March. That could be for a number of reasons, including — you know, a stronger dollar reducing exports and there's an economic slowdown in Asia and parts of Europe, and that might just be causing businesses to be a little bit cautious.

    The trend for jobs is still up. We'd expect to see wages accelerate if we continue to be adding jobs at the pace we had been before last month.

  • HARI SREENIVASAN:

    All right. Eric Morath of "The Wall Street Journal" joining us from Washington — thanks so much.

  • ERIC MORATH:

    Sure, anytime.

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