WILE E. COYOTE has finally caught the Roadrunner: wages have finally caught up to inflation. It took a while.
Inflation raced ahead of wages starting in March 2021 and stayed ahead for 23 months—almost two years. At the end of that long losing streak for workers, wage increases (7.4 per cent) were much lower than price increases (11.4 per cent)—a four per cent gap.
Like Wile E. Coyote eating dust as the Road Runner speeds out of sight, workers were left with little chance of keeping up with their much faster inflation rival. To make matters worse, workers got fingered for driving up inflation—even though wages were clearly lagging far behind inflation.
The Bank of Canada kept raising interest rates to deliberately raise unemployment and undermine future wage gains.
Despite the brainless bank policies wages began to gain ground on inflation. February 2023 was a turning point: for the first time in two years, wages passed prices.
Average hourly wages grew over the preceding year (up 5.4 per cent), just slightly more than prices (up 5.2 per cent). The recent June 9 jobs report from Statistics Canada reported annual wage rates still ahead of inflation: wage growth of 5.1 per cent for May, while inflation (which won’t be reported until late June) will likely fall to 4 per cent or lower.
Real wage loss still
greater than inflation
“It’s far too early for workers to pop any champagne corks,” warns Jim Stanford, economist and Director of the Centre for Future Work.
“Two years of lagging behind prices reduced real wages by close to 4 per cent. That means wages would have to grow faster than prices by a considerable margin (say, two percentage points a year) for a considerable time (say, two years) just to repair the damage done to purchasing power since early 2021.
“Nevertheless, the fact that wages are now growing faster than prices is good news for Canadians who work for a living.
And it’s testimony to the effectiveness of labour policies aimed at boosting wage growth — including significant increases in minimum wages in most provinces (except Alberta), and labour law reforms in some jurisdictions to support stronger collective bargaining by unions.”
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