Why are we seeing ‘little change’ in employment but spikes in hourly wages? Economist provides answers
Canada’s labour market paused in March, with employment barely budging and the unemployment rate stuck at 6.7%.
Employment was “little changed” in March (up 14,000) and the employment rate held steady at 60.6%. The unemployment rate was unchanged at 6.7%, according to Statistics Canada’s Labour Force Survey (LFS).
On a year-over-year basis, employment was up by 87,000 (+0.4%) in March, largely reflecting gains over the final four months of 2025, says the agency, which noted that the employment rate in March was just above the low of 60.5% recorded in August 2025 and was down 0.3 percentage points year over year.
Subdued forecast impacts labour force
So what's behind the flatter numbers for March? Given the subdued forecasts for Canada’s economy in 2026 — with GDP growth of 1% to 1.5% — the number of people working between the ages of 15 and 64 “is going to be flat to slightly declining,” says Brendon Bernard, senior economist at Indeed..
“That just limits the growth of the labour force.”
An aging population and changes to immigration policy also factor into that, he says.
“So, unless the economy was going to get a lot stronger, which isn't what the main expectation is, then a stable job market with a stable unemployment rate is going to suggest very little overall net job growth, because the demographics just aren't there to drive that.”
Changing definition of 'good jobs report'
One of the implications of that is, from a jobseeker’s perspective, what constitutes a good jobs report has changed over time, says Bernard.
“We don’t need to add jobs quickly for the unemployment rate to remain stable."
Conversely, there were periods in 2023 and 2024 where employment was growing by tens of thousands in a given month, and yet the unemployment rate was rising, he says.
“That's because the population growth was so strong and so it was boosting job growth, but job growth wasn't strong enough to keep up. And so that was coinciding with a much weaker market for job seekers.
“Now that the demographic trends have shifted, we can have flat job numbers and a flat unemployment rate because job growth doesn't have to keep up with such rapid population growth.”
What’s behind wage growth?
One notable trend in the March job numbers is that average pay continued to rise faster than earlier in the cycle. Average hourly wages among employees increased 4.7% (+$1.68 to $37.73) on a year-over-year basis in March, following growth of 3.9% in February (not seasonally adjusted), Statistics Canada said, calling it “the highest growth rate since October 2024.”
So, what’s behind this growth?
In tracking the rising average hourly earnings over the course of 2025 and the past few months, it’s “a bit strange” since the economic situation hasn’t really changed that much to explain this “unusual spike," says Bernard.
But Ottawa is helpful here, in highlighting that it's “using a method that holds constant the composition of employees by occupation and job tenure,” he says, meaning one the drivers of the growth is the shifting jobs mix, he says.
“One of the things we've seen over the past year or so is that high‑wage occupations have grown faster than low‑wage ones,” says Bernard, with high-wage occupations seeing employment growth of 1.9% compared to 1.5% for low-wage occupations.
“That kind of shift in the types of jobs people are working in can have a material impact on the pace of wage growth. And I think that's a key source for why the situation has changed in the data over the past few months.”
Comparing LFS to SEPH
Across age groups, the agency reported that year-over-year hourly wage growth in March was highest among employees aged 55 and older (+5.2%) and lowest among young employees aged 15 to 24 (+1.8%), while among core-aged (25 to 54 years old) employees, the average hourly wage was up 4.5% over this period.
Bernard points to another important survey from Statistics Canada, the Survey of Employment, Payroll and Hours (SEPH), and says the same increase isn’t evident in this data.
“For instance, the SEPH measure of fixed‑wage, hourly earnings shows year‑over‑year growth around 3%, which is… not far from what the LFS was showing before this latest jump up.
“So, I'm kind of taking this LFS data with a grain of salt.”
