Canadians working more while wages stagnate: report

Ever feel like you’re working harder than ever at the office, yet, somehow, all that increased effort never seems to show up in your wallet?

The good news is, you’re not crazy.

That’s also the bad news.

The Parliamentary Budget Office released a report this week highlighting this very issue. Specifically, the report notes the growth in wages and compensation has been “broadly stagnant” even as the economy has continued to recover in the wake of the 2008 global recession.

At the same time, the effort we are putting into our jobs – measured in labour productivity – has continued to increase.

It’s not a totally unexpected outcome. As the report notes, “wages tend to be suppressed in times when the number of available workers exceeds the number of available jobs.”

To that end, we have seen growth, albeit modest, in the average real wage in recent years as the labour market has strengthened. But the trend upward has yet to match increases we saw prior to the recession.

Moreover, the report found recent wage improvements have not been distributed equally, instead favouring the top earners in the country while the rest of us have yet to mark any real gains.

In the last quarter of 2013, the real median hourly wage was about the same as it was in 2010, “suggesting the real purchasing power of workers has remained roughly unchanged since then,” the PBO report states.

But before you break out the anarchy mask and look to re-start the Occupy movement, this isn’t necessarily about the so-called One Per Cent.

Pedro Antunes, deputy chief economist with the Conference Board of Canada, said the findings serve to highlight significant regional and sectional differences in the labour market, rather than in socio-economic class.

Those of us employed in certain industries, for instance, such as forestry, fishing, mining, oil and gas and professional scientific and technical services, currently show higher average real wage growth than other industries.

The same is true if you happen to be living in “have” province such as Alberta, where a hot labour market has workers earning, on average about $11,000 more per year than those of us in other provinces.

“That’s a fair difference,” said Antunes.

Young Canadians continue to struggle

On the other side of that coin, the report underscores the disservice we’re doing our young workers. Those between 15 and 24 years old continue to be vastly un- and underemployed despite job and wage gains elsewhere.

“That’s a concern. It reflects a missed opportunity to get those young people back into the labour market,” said Antunes.

Supporting the findings of the PBO is a new report by CIBC examining wage growth and disposable income growth (or lack thereof).

“One constant from last year to this one is that household wallets will be improving at what can only be described as a mediocre pace,” write economists and report co-authors Avery Shenfeld and Benjamin Tal.

According to the authors, last year’s “generally lacklustre” wage and employment picture is captured in a slowdown in disposable income growth. Disposable income rose by only 3.6 per cent last year – the weakest non-recessionary showing since 1996.

With too many Canadians not yet fully employed across sectors, Shenfeld said we shouldn’t expect acceleration to our wages this year. Rather, it may be 2015 before we see improvements to our paycheques with a potentially tighter labour market giving workers back some much-anticipated bargaining power.

According to CIBC, bargain retailers, particularly dollar stores, have been the big winners on the retail scene. But with income disparity growing, luxury retailers also stand to profit, though not as dramatically as in the United States.

“Despite a rising trend in inequality over prior decades, both pre- and after-tax income in Canada is not nearly as unevenly distributed as it is stateside,” the bank said.

As of 2010, a U.S. tax-filer had to earn $359,400 to be in the top 1 per cent of Americans. The corresponding figure for Canada was $201,400.