Industry & Sector,  Research,  Trade Unions,  Wages

Solid Wage Gains for Construction Workers Needed to Cement Productivity Gains

Paycheques for workers in Ontario’s booming construction industry are coming up short despite surging productivity and a sharp rise in building activity, a new report from the Centre for Future Work shows.

Relative to consumer prices, the real purchasing power of construction wages has been stagnant in recent years even though real labour productivity in the sector has grown very strongly. Workers are generating more output and revenue for their employers, but not getting their fair share of the value they’re creating.

Nominal wages in construction grew at an average rate of 1.9% over the last five years, considerably slower than broader wages in Ontario’s labour market (which grew at 3.4% per year according to Statistics Canada labour force data). Relative to consumer prices, real wages hardly grew at all – contrasting sharply with a 14% cumulative increase in labour productivity in the sector over that same period.

According to the report’s author, Dr. Jim Stanford of the Centre for Future Work, “Real wages are not remotely keeping up with the increasing real productivity of construction workers in Ontario. With inflation increasing, the time to correct that imbalance is now.”

The construction industry has played an outsized role in stabilizing Ontario’s economy during the COVID-19 pandemic, the report says. When the pandemic hit, construction was one of only three non-agricultural industries that actually expanded real output in 2020. And the rebound in construction continues to power the province’s economic recovery: housing starts increased by 18% for 2020 as a whole, and are on track to set another record in 2021 with over 100,000 units. Non-residential capital construction will also hit a record high in 2021.

The construction sector accounts for more than $60 billion in annual economic activity in Ontario and provides more than half a million direct jobs – as well as another 600-800,000 indirect jobs resulting from the industry’s supply chain and consumer spending by construction workers.

Please see the full report, Building Ontario’s Post-COVID Economy: The Vital Role of Construction Employment and Wages, by Jim Stanford.

The report was commissioned by the Provincial Building and Construction Trades Council of Ontario.

Jim Stanford is Economist and Director of the Centre for Future Work. He divides his time between Sydney, Australia and Vancouver, Canada. Jim is one of Canada’s best-known economic commentators. He served for over 20 years as Economist and Director of Policy with Unifor, Canada’s largest private-sector trade union.