Inflation Eats Up More Than Half of Wage Gains

Today, Statistics Canada reported an inflation rate of 1.2% for June, validating the Bank of Canada’s recent decision to keep interest rates low for the foreseeable future. The rationale to raise interest rates would be to curb inflation, which is already under control and well below the central bank’s 2% target.

But even at 1.2%, inflation eats up more than half of wage gains over the past year. The Labour Force Survey indicated that the average hourly wage rose by just 2.2% between June 2012 and June 2013.

Governments should be trying to foster a wage-led recovery by making it easier for workers to collectively bargain for better pay and benefits. Increased purchasing power would translate into more consumer demand and economic growth. Instead, the federal Conservatives have pursued a low-wage strategy by expanding the temporary foreign worker program, restricting Employment Insurance, and attacking unions.

Erin Weir is an economist with the United Steelworkers union and a CCPA research associate.

One comment

  1. Average, huh? At the risk of sounding broken record-ish, how much did the median wage go up?
    Some hints might come from the breakdown at the link: Young people’s wages went up less than inflation, part time pay actually went DOWN in nominal terms (and of course that’s an ever-growing sector lately), and on the other hand management pay went up 4.8%.
    I’m suspecting here that pay for the wealthy went up rather more than that 2.2%, while pay for ordinary people barely kept pace with inflation.

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