Wage growth in Canada has been sluggish as the economy recovers from the COVID-19 pandemic, despite employers saying they’re struggling to fill positions as their operations ramp up, new figures suggest. In July, the average hourly wage was $29.19, according to a new Statistics Canada metric that adjusts for some pandemic labour shocks. Wages were up 1.1% since the beginning of this year, but only 0.3% since April, 2020, when millions were out of work. As pay grew slowly in 2021, inflation accelerated, leading to sticker shock on everything from lumber to used cars.

The labour recovery is a subject of considerable debate. Many companies say they’re unable to find workers, pointing the finger at government income supports that remain in place. Labour advocates say the solution is simple: raise wages.

But the Statscan figures suggest pay isn’t budging much. Meanwhile, wage growth is heating up in the U.S. as several high-profile employers boost their minimum pay, aimed at luring people back into the work force.

Canadian wage numbers “don’t look very promising at all,” said Jim Stanford, economist and director of the Centre for Future Work, a think tank. “All of these anecdotes about restaurants offering $30 an hour for someone to wash dishes, that’s not showing up at all in the actual empirical data.”

The pandemic has made it tougher to analyze pay trends. Low-wage workers have been disproportionately targeted by layoffs, while high-wage work is thriving. The uneven impact has boosted average pay, though under difficult circumstances.

To get a better sense of wages, Statistics Canada analyzed the numbers as though the distribution of workers across occupations and job tenures was the same as it was in 2019. This served to iron out some of the pandemic distortions to employment.

In doing so, Statscan found that wages are lagging behind official figures. Over the past two years, the average hourly wage rose 6.8% to $29.59 in July – but, after Statscan’s adjustments, wages increased just 4.6% to $29.19. The difference between the two wage measurements has narrowed of late, Statscan noted, as the labour market pulls closer to a full recovery.

As of July, Canada had recouped about 92% of pandemic job losses, and employment was down 246,000 positions from February, 2020. The hospitality industry, which includes restaurants, accounts for most of the remaining shortfall. It was down 228,000 jobs.

It’s not that restaurants don’t want workers. By the end of July, the number of job postings for food-service roles on Indeed Canada was up 72% from before the pandemic. But wage growth has been tepid: The median hourly wage in hospitality was $15.20 in July, little changed from when the health crisis started.

Wage pressure may take time to materialize. Over the next year, small business owners expect to raise average wages by 2.2%, noticeably higher than last summer’s expectation, according to a survey from the Canadian Federation of Independent Business.

The U.S. is seeing wage growth heat up. In July, average hourly earnings rose 0.4% from June, putting them 4% higher than a year earlier. In hospitality, average hourly pay was up 9.6% from July, 2020. The likes of McDonald’s Corp., Target Corp. and Best Buy Co. Inc. have unveiled plans to hike wages.

Still, there are an ever-increasing number of U.S. jobs to fill, putting upward pressure on pay. The U.S. Labour Department said on August 9 there were just over 10 million job openings in June, a new record.

Source: Globe and Mail