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At Last, Wages are Growing Faster Than Prices… and That’s Good
A turning point has recently been reached in the current inflationary upsurge in Canada. Beginning in February, for the first time in two years, the growth in average hourly wages over the previous 12 months finally matched, and slightly exceeded, the corresponding growth in prices. This is a positive development – but doesn’t mean that workers have ‘caught up’ to recent inflation. Because real wages fell so much in 2021 and 2022, wages will need to grow faster than prices for some years to come to repair the damage to workers’ living standards
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Inflation is Coming Down – But Interest Rates Have Nothing To Do With It
New inflation data indicates a welcome slowing of inflation. Prices increased by an average of 4.3% over the 12 months ending in March. That’s barely half the year-over-year inflation rate just 9 months ago, in June 2022 (when inflation peaked at 8.1%). Despite this encouraging news, however, there are some important and worrying factors lurking in the weeds...
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We Need More Goods, not Less Money
In this commentary article, originally published in the Toronto Star, Jim Stanford challenges the adage that inflation results from ‘too much money’ in the economy. In fact, the current inflation – sparked by the repercussions from lockdowns and other supply disruptions during the pandemic – clearly indicates the problem is too few goods. That requires a very different approach to managing rising prices.
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The False Doctrine of the ‘Labour Shortage’
A common argument that Canada faces a severe ‘labour shortage’ is being invoked to justify regressive policies in many areas: including higher interest rates, record-high (but exploitive) immigration programs, and pushing back the normal retirement age. In this column, originally published in the Toronto Star, Centre for Future Work Director Jim Stanford shows that Canada has not ‘run out’ of workers. Forcibly creating a cushion of surplus labour (through policies to compel labour supply or restrict labour demand) will make life easier for corporate HR managers. But they will undermine the life changes of millions. Humans are not Widgets, and we aren’t in ‘Short Supply’ By Jim Stanford Busy people…
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Fifteen Super-Profitable Industries are Driving Canadian Inflation
A new research paper from the Centre for Future Work sheds new light on the role of surging corporate profits in driving higher Canadian inflation. The report provides details on net income in 15 super-profitable private-sector industries in Canada, based on newly released data from Statistics Canada. It compares the most recent 12-month period to profit levels before the pandemic (in 2019). Combined profits in those 15 sectors grew by 89%, rising by a total of $143 billion. In contrast, profits in the other 37 business sectors tracked by Statistics Canada fell over the same time. The oil and gas industry experienced by far the largest increase in profits: up…
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Sector Bargaining and Broader Based Bargaining
Labour advocates and researchers around the world have been investigating the possibility of new systems of broader based collective bargaining, as a promising strategy for reversing the decline in collective bargaining coverage which has occurred in many countries. Sectoral, occupational, and other broader-based bargaining systems allow negotiations to occur at more than one workplace or enterprise at a time: across occupations, sectors, or regions. They can allow bargainers to establish common terms across multiple worksites – such as covering all franchises within a large commercial chain. And by establishing terms and conditions that apply evenly across broader sets of businesses, broader based bargaining does not disadvantage any particular company or…
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Higher Interest Rates Starting to Bite in Canada’s Labour Market
New labour force data from Statistics Canada confirm that Canada’s economy is already slowing down sharply as a result of aggressive interest rate increases begun by the Bank of Canada in March. With the U.S. economy (Canada’s largest trading partner) already in technical recession (with two consecutive quarters of real GDP contraction), and monthly GDP data showing no growth since May, this new report adds to worries that Canada’s economy is heading into recession as well. The labour force data confirm that the aggressive monetary tightening begun by the Bank of Canada in March is having a negative impact on employment and participation in Canada’s labour market. Employment fell in…
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Podcast: Rising Inflation Creates Tension in Collective Bargaining
With year-over-year inflation topping 8%, far in advance of nominal wage gains, workers in all parts of Canada’s economy are struggling to protect their real living standards. Real wages have declined by more than 3% in the last 12 months alone, with further erosion pegged in the months ahead. Collective bargaining tables in both the private and public sectors have been roiled by the acceleration in inflation. Workers are determined to try to keep up with inflation. And that determination is only heightened by the fact that corporate profits have increased so strongly alongside the rise in consumer prices. Some major strikes have already occurred (such as in Ontario’s construction…
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Wage Growth Picking Up, but Shows Important Differences Across Categories
There are some signs of a modest acceleration in nominal wage growth in Canada. This is not surprising, given both relatively tight labour markets and the impact of accelerating inflation on the wage demands of Canadian workers. Average hourly wages paid across the labour market grew 3.9% in the 12 months ending in May (latest data). That is an increase from year-over-year growth rates of 2.5% to 3% recorded in late 2021 and early in 2022. Wages are still growing at only about half the pace of consumer prices, which grew 7.7% (according to the Consumer Price Index) over the same period. Since wage growth is weaker than price inflation,…
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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