Wage Stagnation: What You Need to Know

A crucial part of almost everyone’s life is a job. We spend money to go to school for it. We put in hours training, applying and interviewing. But it isn’t just because we want to work, it’s to earn money. The truth is we work so we can make a wage that supports our lifestyle and our family.

Unfortunately, now more than ever, Canadians are faced with a big obstacle when it comes to their pay – wage stagnation.

As our society and economy change, most would expect that wages would follow suit. That’s not happening. While it’s true that minimum wages have been rising as of late, wage stagnation is still a huge issue with even the Organization for Economic Co-operation and Development calling it ‘unprecedented.’ This is an even bigger issue if you have no one advocating for your wage rights at work.

Here is what you need to know about wage stagnation.

Little Change Since the 70s

It sounds hard to believe, but there has been very little change in over four decades to the average wage in our country. According to Statistics Canada, average hourly earnings peaked at $24 in 1977 – the average hourly earnings in 2016 were only $27.70. But the number of people earning degrees has been steadily increasing over the last 20 years. Unfortunately, that means more education is not translating into higher wages.

Growth in the Precarious and the Powerful

There are two employment trends found at the top and bottom of the wage spectrum that is having a big impact on wage stagnation. Precarious and unstable work is on the rise in Canada and so is the power and wealth of the top 1 per cent. This is creating an erosion of the middle class. Canadians are increasingly taking lower paying unstable jobs or ‘gig’ positions. This growing trend has lowered wage expectations for many people either currently in or entering the labour market.

Lack of Labour Protection

With the transforming economy, a lot has changed when it comes to workplace protections. One of the biggest changes is that unionization has been steadily declining over the years. Unions have been directly connected to increasing the standard of wages, as they decline, so does the pressure on employers to pay more. Weak labour laws across the country have also affected important wage issues such as overtime and wage theft.

Cost of Living

While wages may not be rising steadily, the cost of living sure has. This combination has had a devastating impact on Canadians, but millennials in particular. The cost of post-secondary has been rising and house prices are skyrocketing – this makes starting a family or purchasing a home seem like a distant dream. A recent study has shown that this combined with lower income mobility has created a ‘perfect storm’ for holding back wealth accumulation.

What you earn has such a huge impact on your life. When you work hard, you deserve a good wage. Wage stagnation may be the norm in Canada, but that doesn’t mean employers need to follow that trend. If you want to hire and retain good employees, then they should be paid like they matter.