Wages and Inflation by Province (Updated)

Albertans are being paid less per hour, on average, than they were a year ago. It seems that the resource boom has increased prices more than wages in that province. Relative to inflation, wages also fell slightly in Ontario.

Today, Statistics Canada released April’s Consumer Price Index. Although inflation is down slightly and wages were up in the last Labour Force Survey, Canada’s real wages increased by only 0.7%, on average, over the past year.

As always, the national figure masks significant regional variations. Real wages apparently increased quite strongly in New Brunswick and Nova Scotia, and by appreciably more than the national average in Newfoundland, PEI, Manitoba, Saskatchewan, and BC. Of course, monthly survey data on smaller provinces should be taken with a grain of salt.

Real wages fell in the two highest-wage provinces and rose in lower-wage provinces. This convergence undermines the conventional wisdom of insurmountable labour shortages in Alberta and significant barriers to labour mobility between provinces. If supposed labour shortages were not being addressed by inter-provincial migration, the result would presumably have been a large increase in Alberta’s real wages.

Changes from April 2006 through April 2007

Wages Inflation Real Rise (Fall)

Canada 2.9% 2.2% 0.7%

Newfoundland 3.1% 1.4% 1.7%

PEI 2.8% 1.4% 1.4%

Nova Scotia 5.4% 1.4% 4.0%

New Brunswick 5.7% 1.1% 4.6%

Quebec 2.3% 1.4% 0.9%

Ontario 1.7% 1.8% (0.1%)

Manitoba 4.3% 2.2% 2.1%

Saskatchewan 4.3% 2.4% 1.9%

Alberta 5.1% 5.5% (0.4%)

British Columbia 4.0% 1.9% 2.1%

UPDATE (May 18): From today’s Edmonton Journal:

Hot housing pushes up national core inflation rate

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CanWest News Service

Friday, May 18, 2007

OTTAWA – The loonie jumped back up above 91 cents US Thursday as expectations of an interest rate hike by the Bank of Canada increased following news that core inflation has hit a four-year high.

Overall inflation rate eased a notch last month to 2.2 per cent from 2.3.

Core inflation, which excludes some volatile energy and food prices, rose to 2.5 per cent, its highest level since March 2003 and half a point above the bank’s two-per-cent target.

Albertans by far faced the steepest increase, with consumer prices up 5.5 per cent from a year earlier. Edmonton’s rate jumped from 4.6 to 5.0 per cent; Calgary’s rate was up a half per cent to 6.0 per cent. And the wages of Albertans aren’t keeping pace, said Canadian Labour Congress economist Erin Weir, who calculated that the after-inflation hourly wage in Alberta was down 0.4 per cent from a year ago.

Wages in Ontario also failed to keep pace with inflation, rising just 1.7 per cent over the year, a notch below the 1.8-per-cent rate of inflation in that province, he noted.

While real wages rose in the other provinces, the after-inflation increase nationally was just 0.7 per cent, he added.

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