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Show us the Money: Jobs Are Back but Wages Are Still Behind the Curve

Coming on the heels of a surprisingly weak March, April’s strong jobs report reassured investors and employers that the recovery still has momentum, although wage growth remained sluggish.

Economists were cheered by the 211,000 jobs added and the ticking-down of the unemployment rate to 4.4 percent. Even the widest measure of unemployment, the so-called U-6, fell to 8.6 percent, the lowest it has been since late 2007. It had gone as high as 17.1 percent for several months in 2009 and 2010.

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“Overall, it’s a big sigh of relief,” said Dan North, chief economist at Euler Hermes North America. “It erases doubt about March.”

“It was encouraging that last month was a one-off,” said Sameer Samana, global quantitative strategist for Wells Fargo Investment Institute. “Unemployment and underemployment both hit cycle lows… It shows the labor market recovery might be picking up a little bit of steam.”

Despite uncertainty over the fate of the Affordable Care Act or what might replace it, healthcare jobs grew by 20,000 in April. Manufacturing eked out 6,000 more jobs, and after a bruising first quarter, the retail industry took some hope in job gains over the past month. “This rebound in April employment mitigates the weakness in recent months,” the National Retail Federation’s chief economist Jack Kleinhenz said in a statement.

Related: The Economy Added 211,000 Jobs in April, Beating Expectations

“I think physical employment in retail will continue to be sluggish,” said Harry Holzer, a public policy professor at Georgetown University, although he added that this has a silver lining.

“E-commerce is associated with fairly high growth in trucking and warehouse jobs, and those are often better jobs than retail jobs,” he told NBC News.

Wage growth remained a sticking point, at just 2.5 percent on an annualized basis.

“Certainly, the wage component is the most disappointing,” said Mark Hamrick, senior economic analyst at Bankrate.com.

“We’ve seen the same trend in Glassdoor’s local pay reports for the nation as a whole,” said Glassdoor chief economist Andrew Chamberlain. “Median pay growth peaked around December and has been ticking down in our data. It’s hard to pin down one single explanation,” he said.

Experts say that’s because there probably isn’t one. It’s more likely that a combination of factors are contributing to slow wage growth — or at least to the appearance of it.

Where Are All the Workers?

With employment strong, North said the pace suggested that some businesses can’t find employees with the skills they need at any price.

“There’s less impetus to raise wages,” he said. “I also think employers are managing costs as much as they possibly can.”

Bankrate’s Hamrick concurred. “There will still be a skills gap in this country, and that’s part of the problem,” he said. “What we hear from employers is that there is a significant number having difficulty finding qualified workers.”

Related: Did We Gain or Lose Jobs?

Holzer suggested the wage growth figure might be artificially low, a result of senior-level — and higher-paid — baby boomers retiring and being replaced by younger workers at lower pay rates.

The Federal Reserve Bank of Atlanta uses an alternate measure of wage growth in an effort to strip out this effect. As of March, the most recent month available, it does show an overall wage growth of 3.4 percent, a figure closer to what economists consider healthy. For people switching jobs, gains are greater, with wage growth up by 4.1 percent — which is at the high end of what economists say indicates a healthy economy.

“The really nice part is that virtuous cycle you get into,” Samana said. When consumer spending spurs demand, that can translate into more disposable income for the average American, which feeds back into spending growth. “The beauty of the U.S. economy is, once it gets going, it does its own thing. The improvements feed on themselves.”