Workers stuck at 70s wage levels, says study

Benefits of economic growth not reflected in paycheques

Despite a prolonged period of economic expansion, income inequality is growing in Canada. That’s according to a report by the Canadian Centre for Policy Alternatives (CCPA) in Toronto titled Rising Profit Shares, Falling Wage Shares.

The study confirmed the suspicions of many Canadians in stating “the benefits of economic growth have not been widely reflected in Canadians’ paycheques over the course of a generation.”

Average real wages — adjusted for inflation — have not increased in more than 30 years and real wages have decreased for the lowest-paid workers, say co-authors Ellen Russell and Mathieu Dufour.

And this despite the fact Canada’s economy has enjoyed a prolonged period of economic prosperity, growing by 72 per cent between 1975 and 2005 in real per capita terms. Over the same time period, labour productivity (measured as gross domestic product per hour) grew by 51 per cent.

In analyzing various reports from Statistics Canada, the study finds Canadian workers’ real hourly wages grew steadily in the early 1970s but have since flattened. If full-time workers earned real wages that rose in proportion to their productivity increases between 1991 and 2005, they could have been receiving at least $10,000 more in average real pay in 2005.

“The stagnation of workers’ real average wages is remarkable, given that Canadian workers are increasingly productive,” write Russell and Dufour. “It is evident that rising productivity is not generating a commensurate rise in real wages.”

Rising Profit finds there are differences among industries, as the hourly wage of employees in finance, insurance and real estate sectors increased by 15 to 20 per cent while workers in transportation experienced a loss of 16 to 17 per cent.

In trying to understand the falling wage share, the CCPA looks to corporate profit share, which rose from about 29 per cent of the economic pie in 1961 to 34 per cent by 2005 (compared to workers’ share, which fell from 65 per cent in 1961 to 60 per cent by 2005).

“The distribution of total income is increasingly slanted in favour of corporations rather than Canadian workers,” states the study.

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