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New Video: Profits, not Wages, are the Driving Force Behind Inflation
What’s causing the current surge in inflation? And what should be done about it? In this new video, the latest in our “Debunkers’ Academy” series, Jim Stanford from the Centre for Future Work shows it’s not higher wages driving higher prices — in fact, wages are lagging far behind prices, and falling in real terms. The real culprit is corporations, who have taken advantage of the disruptions of the pandemic to jack up their prices (and their profits). This inflation is different than the 1970s, and it needs a different solution. Watch and learn! https://www.youtube.com/watch?v=8DgwM7nruQg
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Business Profits from Inflation, but Workers Will Pay to Bring it Down
As the Bank of Canada announced another increase in its trend-setting interest rate today, new data from Statistics Canada confirms businesses have pocketed record-breaking profits from accelerating inflation, while workers’ wages lag far behind. Centre for Future Work analysis of national income accounts released yesterday by Statistics Canada indicate that after-tax corporate profits reached their highest share of GDP ever in the first quarter of 2022, as inflation surged. After-tax profits grew 11% in the quarter (compared to the fourth quarter of 2021), to an annualized total of over $500 billion. That represents the highest share of total GDP (18.8%) since Statistics Canada began collecting GDP data. Meanwhile, workers’ wages…
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Don’t Make Workers Pay for Inflation they Didn’t Cause
The gap between inflation and wage growth for Canadian workers is exacting a punishing toll on real living standards. In the last 12 months alone, consumer prices increased more than twice as fast as wages. The gap between the two translates into a substantial reduction in real living standards for workers. In this commentary (which originally appeared in the Toronto Star), Centre for Future Work Director Jim Stanford provides evidence that the current surge in inflation cannot possibly be attributed to labour costs. Business profits have widened as inflation picked up steam. Lifting wages (for both private and public sector workers) to protect against the effects of inflation does not…
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Inflation: Causes, Consequences, and Cures
The surge in inflation in recent months has generated great concern and debate in Canada. This inflation is clearly the result of unique and often external factors related to the COVID pandemic and subsequent recovery: including disruptions in global supply chains (such as the chaos in superconductor markets), energy shocks (made worse by the war in Ukraine), and shifts in consumer demand away from services and towards goods products (due to restrictions on many service activities during the pandemic). Despite the unique nature of this inflation, anti-inflation hawks are now dusting off their old policy recipes to restrain domestic demand and employment, and wrestle inflation back to the ground. The…
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Wages Gain Steam, But Not Enough to Keep Up With Inflation
The latest employment data from Statistics Canada confirm that Canada’s post-COVID recovery remains strong. The unemployment rate in March fell to 5.3%, the lowest since Statistics Canada began its monthly labour force survey in 1976. Another positive sign was an uptick in the growth of average wages. Hourly wages grew by 3.4% in the year ending in March, and weekly wages grew by 3.9% in the same period (weekly wages grew faster than hourly wages thanks to increases in full-time work and average hours of work). That represents a modest acceleration in wage growth from recent months. However, the pace of wage growth has really just returned to normal pre-pandemic…