Wages grew in March, but more slowly than they have in years

With the monthly jobs report also came fresh data about hourly worker wages.

Compared to last year, that number is relatively stable. Wages have gone up 3.5%. But since February, they’ve eked up just 0.2%, the slowest increase in nearly five years. In the short term, that’s way more cause for concern — but economists aren’t panicking yet.

While this month does look bad for wage growth, it’s been declining for a while now after the inflationary, post-lockdown high. And it’s just one month.

“The data doesn’t really point to a sharp deterioration,” said Daniel Zhao, chief economist at Glassdoor.

He said slowing wage growth makes sense in a slow job market.

“Gross hires are very low by historical standards, and so it’s very hard for people to go and find a better-paying job on the open market,” Zhao said.

The bigger concern isn’t that wage growth is slowing — it’s that it’s slowing while inflation is creeping up, said economist Courtney Shupert at MacroPolicy Perspectives.

“That’s a hit to disposable income and a hit to consumer purchasing power,” she said.

If things you need to buy — like food and electricity — go up faster than your wages, your actual purchasing power goes down.

“So you’re maybe spending more on gas, and maybe you have to offset your consumption elsewhere in your monthly budget,” Shupert said.

And inflation is expected to get worse because of the war in the Middle East. Joe Brusuelas, chief economist for the consulting firm RSM, said the war has unleashed a prodigious oil and energy shock.

“Should the war continue, there’s a chance that real wage growth could go from slowing noticeably to outright contraction,” he said.

That’s when the rate of inflation exceeds the rate of job growth. So industries that rely on discretionary spending — hotels, restaurants, leisure — could weaken right at the time of year that they would be taking off.

“The war in Iran, for American households, may mean it’s a staycation rather than a vacation this year,” Brusuelas said.

Just how high inflation will climb after the war won’t show up until fresh consumer price index data gets released next week.