Canadians see real wages falling as inflation outpaces incomes

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The Canadian economy may seem booming, but not for everyone. Statistics Canada (Stat Can) payroll data shows a high number of vacancies in February. Salaries have increased, as one would expect with such a high number of vacancies. They simply failed to keep up with the kind of growth expected in a high inflation environment. Average wages have risen by less than half the rate of inflation, which means a loss of real income.

Canadian employees on payroll fell, but increased seasonally

Unadjusted Stat Can employees on payroll saw a sharp drop in the month. Unadjusted employees reached 15.9 million in February, down 3.45% (570,100) employees from the previous month. It effectively brings the numbers back to September 2021.

When adjusted for the season, the data looks much better. The seasonally adjusted number of employees reached 17.2 million in February, up 0.8% (142,900 employees). More than 1.3 million jobs are only on paper and are considered seasonal demand. Usually seasonal adjustments don’t change much, but this one is worth mentioning. Especially since wages don’t seem to reflect the tense labor market narrative.

Average Canadian wages fall in real terms

Speaking of wage growth, in a tight labor market with high inflation, wages should skyrocket, right? This is not the case, it seems. Employees earned an average of $1,160 in February, up 2.4% from a year ago. In any other year, that would be a big push. This year, when the CPI was 5.7% over the same period, that means real wages fell 3.3%, which isn’t huge. Subsequent inflation data has already been released and most likely exceeded wages.

Average weekly wage in Canada

The weekly earnings of an average salaried employee in Canada, including overtime. Expressed in current dollars and January 2020 dollars.

Source: Statistics Canada; Live better.

Job vacancies in Canada remain high

Canada still has many jobs to fill and few people interested in filling those positions. Job vacancies stood at 826,500 jobs, down 0.5% from the previous month. This is down 16.4% (-161,800) from the record high set in September 2021. Falling vacancies mean labor market pressures are easing, but let’s not rush . Vacancies are still over 60% higher than they were at the start of 2020, so it’s still very high. It’s just not that high.

Vacancies in Canada

The monthly number of vacancies in Canada.

Source: Statistics Canada; Live better.

February payroll data was mixed as real wages fell amid high job vacancies. High inflation does not (yet) translate into higher wages, which means that households take home less. It has long been a problem that wages cannot keep pace with housing in Canada. However, it’s pretty rare to see wages failing to keep up with inflation – especially when it’s supposed to be a big economy.

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