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Alicia Planincic: Prices have gone up but so have wages. Are Canadians falling behind? 

Commentary

A shopper reaches for groceries in a No Frills grocery store in Toronto, May 30, 2024. Chris Young/The Canadian Press.

In each EconMinute, Business Council of Alberta economist Alicia Planincic seeks to better understand the economic issues that matter to Canadians: from business competitiveness to housing affordability to living standards and our country’s lack of productivity growth. She strives to answer burning questions, tackle misconceptions, and uncover what’s really going on in the Canadian economy.

Inflation may be cooling (barring last month’s surprise uptick) but less inflation just means prices are going up at a slower rate. The price of milk is now 20 percent more expensive than it was just five years ago and is unlikely to get any cheaper.

But it’s not just prices that have gone up. Workers have also seen their wages rise faster in recent years than they did in the past. When unemployment was extremely low and consumer demand was high, businesses had to compete for employees. This meant offering increasingly attractive wages to be able to add or even simply retain staff.

The question is if this has been enough to offset the pain of inflation. As it turns out, it has. Sticker shock aside, Canadians are better off financially than they were five years ago. But it’s not all good news.

First, the gains are extremely small. Over the last five years, prices rose by 18 percent while average hourly wages increased by 20 percent (according to a survey on payrolls that accounts for compositional changes in the workforce). This means “real” wages have grown by just 2 percent, and Canadians can afford slightly more than they could back then.

Graphic credit: Janice Nelson. 

Of course, this is only an average. Plenty of people are not in better financial shape such as those in provinces that have seen weaker wage growth, including Saskatchewan, Newfoundland, and Alberta. Likewise, certain occupations—including those in construction, finance, and hospitality—have seen weaker wage gains. At the same time, higher-than-average price increases for certain items (e.g., rent, gas) will weigh more heavily on some.

Second, weak real wage growth in recent years is not an anomaly but the continuation of a longer trend. From 2014 to 2019, growth in wages only marginally outpaced increases in prices: 11 percent versus 8 percent, leaving real wages up just 3 percent.

All this means that Canadians have seen real wages grow by well under 1 percent per year going all the way back to 2014. With this in mind, perhaps the affordability problem that is top of mind for Canadians today is not just about inflation, per se, but instead reflects something else: a fundamental weakness of Canada’s economy to deliver real improvements in wages for an entire decade.

This post was originally published by the Business Council of Alberta at businesscouncilab.com.

Monte Solberg: Why Trudeau’s broken tree planting promise matters

Commentary

Federal Liberal leader Justin Trudeau plants a tree with his sons at the Frank Conservation Area in Plainfield, Ont., October 6, 2019. Frank Gunn/The Canadian Press.

Everyone wants to save the Earth, but no one wants to help Mom do the dishes. – P.J. O’Rourke

Not all who wander are lost. – J. R. R. Tolkien

The reasons for the Trudeau government’s poor political standing are many. You don’t usually fall behind your chief opponent by 20 points for a single reason. But a key reason is that the prime minister and his team promise big but underdeliver. A towering symbol of this is their promise to plant two billion trees by 2031 to reduce GHGs. The program is off to a bad start.

By itself, not a big deal. Trees aren’t usually a ballot issue, but the tree program represents a pattern that is hard to ignore.

Last year in an audit, Canada’s environment commissioner, called out the tree planting program for failing to get timely agreements with the provinces, failing to get commitments through to 2031, not giving nurseries the certainty and time they need to start growing 350 million trees a year, and generally poor planning. The program didn’t even have annual tree planting targets. Where’s a deliverologist when you need one?

The report also noted, and this is infuriating, that in 78 sites where 10,000 or more trees were planted, they planted all the same species of tree, a monoculture. The commissioner noted in the bloodless language of the public service, that monocultures “do not support biodiversity and other benefits related to environmental and human well-being.” No kidding. Enhancing biodiversity is one of the key goals of the entire program. How could they get this so wrong?

There is more and it’s depressing reading.