Because most of us work to live – and not the other way around – how much we earn and how that’s changing is of fundamental concern to households; it’s also important to businesses (think consumer spending) and to governments (think tax revenues).
To this end, it’s no surprise that media headlines continually revisit issues such as changes to our minimum wage laws, union salary negotiations, government wage increases, personal debt and savings and the level of household income required to buy a home.
With this in mind, we decided to update research we originally undertook back in 1998 that looked at how average weekly earnings had changed in B.C. during the 1980s and 1990s to see how wages have been changing more recently. Interestingly, unlike the trends observed from 1983 to 1996 when real average weekly earnings decreased by 5%, wages have shown gains over the past decade.
Since 1996, average weekly earnings in B.C. have increased 38% (to $866 from $628 by 2012 – average annual growth of 2%). While this is below the 2.9% annual growth seen between 1983 and 1996, inflation in B.C. (and across Canada) has been much tamer in recent years, meaning that real wages (that is, inflation-adjusted wages) have increased 8% since 1996 (to $679 from $628).
Relative to the 5% decline seen in the preceding 13 years, this represents a significant change for households, businesses and government alike, because an increase in real wages translates to people spending and saving more.
While on the surface this looks like a good news story, it becomes more interesting when considered sector by sector and when compared to other provinces.
For example, people working in B.C.’s information and cultural services; mining, oil and gas; and utilities industries all saw substantial wage growth over the past decade and a half.
However, while wage gains in these sectors have been significant, each sector represents a relatively small proportion of jobs in B.C.
Contrasting growth in these sectors, average weekly wages in wholesale and retail trade, which accounts for almost one-fifth of all jobs in B.C., have declined 0.3% since 1996.
Similarly, average weekly earnings for people in the accommodation and food services sector (10% of all jobs in the province) have dropped 5% over the same period.
In addition to real wage declines seen in these sectors, relatively slow growth in real wages has characterized other sectors that represent a significant share of B.C.’s employment.
Manufacturing, which accounts for 7% of total employment, saw real wages increase by only 0.8% between 1996 and 2012. Slow growth or decline in these large sectors has essentially put the brakes on greater overall wage gains for B.C.
This reality becomes clearer when B.C. is compared with other regions.
For example, while B.C. has experienced slightly faster growth in real wages than Canada as a whole (8% versus 7%), the province’s gains have been well below those of its western counterparts.
More specifically, significant wage gains in large employment sectors in Alberta, Saskatchewan and Manitoba have resulted in more substantial real earnings growth overall (with 22% growth in real wages in Alberta and Saskatchewan and 13% in Manitoba since 1996).
Real earnings in the trade sector in Alberta, which represents 17% of all employment (similar to B.C.’s 18%) grew 5% between 1996 and 2012 (that compares with a 0.3% decline in B.C.); and the construction sector, which represents 10% of Alberta’s employment (7% in B.C.), saw real wages grow by 26%, more than double the increase in B.C.
Construction employment in Alberta has also grown significantly since 1996, with more than 80,000 new jobs created up to 2012 (188% growth, or 2.6 times the 72% growth in B.C.).
Because each province has a unique set of drivers to rising (or falling) average wages, a one-size-fits-all policy approach to increasing wages won’t be the way to help B.C. catchup with its western neighbours.
Rather, a focus on policies that increase wages in the province’s largest employment sectors would help push overall average wage gains toward those being realized in other western Canadian provinces and, more importantly, help the greatest share of the province’s workers.
Similarly, increasing employment in sectors where there has been and is expected to be significant wage growth would also help close the gap and benefit a growing share of the province’s workforce. •
