rabble blogs are the personal pages of some of Canada's most insightful progressive activists and commentators. All opinions belong to the writer; however, writers are expected to adhere to our guidelines. We welcome new bloggers -- contact us for details.

Falling real wages signal trouble ahead

Please chip in to support more articles like this. Support rabble.ca for as little as $5 per month!

The Labour Force Survey for August showed that average hourly wages were up by just 1.4 per cent from a year earlier, the same low level of increase as was registered in July. Consumer price inflation was 2.7 per cent in July, a bit down from 3.1 per cent in June and 3.7 per cent in May, but it seems that we have entered a period of falling real wages.

The picture is not much brighter if one looks at average weekly earnings, a function of hours worked and hourly wages. Average weekly wages in both July and August were up just 1.7 per cent from a year earlier.

If this trend continues, it is likely to further undermine a weak recovery, negatively impacting upon consumer spending and perhaps serving as the tipping point to deflation of the housing bubble.

An analysis by the National Bank of Canada suggests that the downward trend in average hourly wages in July can be traced to lower wages in manufacturing, and to a shift in jobs to lower-wage industries.

The LFS data are not the first to pick up a shift to a significant decline in real wages. Union wage settlements averaged 2.0 per cent in the second quarter of this year, and just 1.3 per cent in the first quarter. (In both quarters public settlements were lower than private settlements.)

The Labour Force Survey data precede most other economic indicators. Falling real wages and flat employment growth in the first two months of the third quarter following a negative second quarter can only raise fears of Canada entering a recession.

This article was first posted on The Progressive Economics Forum.

Thank you for reading this story…

More people are reading rabble.ca than ever and unlike many news organizations, we have never put up a paywall – at rabble we’ve always believed in making our reporting and analysis free to all, while striving to make it sustainable as well. Media isn’t free to produce. rabble’s total budget is likely less than what big corporate media spend on photocopying (we kid you not!) and we do not have any major foundation, sponsor or angel investor. Our main supporters are people and organizations -- like you. This is why we need your help. You are what keep us sustainable.

rabble.ca has staked its existence on you. We live or die on community support -- your support! We get hundreds of thousands of visitors and we believe in them. We believe in you. We believe people will put in what they can for the greater good. We call that sustainable.

So what is the easy answer for us? Depend on a community of visitors who care passionately about media that amplifies the voices of people struggling for change and justice. It really is that simple. When the people who visit rabble care enough to contribute a bit then it works for everyone.

And so we’re asking you if you could make a donation, right now, to help us carry forward on our mission. Make a donation today.

Comments

We welcome your comments! rabble.ca embraces a pro-human rights, pro-feminist, anti-racist, queer-positive, anti-imperialist and pro-labour stance, and encourages discussions which develop progressive thought. Our full comment policy can be found here. Learn more about Disqus on rabble.ca and your privacy here. Please keep in mind:

Do

  • Tell the truth and avoid rumours.
  • Add context and background.
  • Report typos and logical fallacies.
  • Be respectful.
  • Respect copyright - link to articles.
  • Stay focused. Bring in-depth commentary to our discussion forum, babble.

Don't

  • Use oppressive/offensive language.
  • Libel or defame.
  • Bully or troll.
  • Post spam.
  • Engage trolls. Flag suspect activity instead.