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Toronto, Vancouver Among Cities Seeing Falling Wages

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You’ve probably read stories about how Canada’s wage growth is nothing to write home about, but new research from the Broadbent Institute adds a surprising dimension to the story: No fewer than 15 of Canada’s 32 largest metro areas saw incomes slide during 2006-2012.

Economist Andrew Jackson, a senior policy adviser at the Broadbent Institute, compiled StatsCan wage data to see how Canadian incomes have held up in the era of the Harper government.

Adjusted for inflation, overall median wages rose a paltry 3.5 per cent during that time, or a little more than half a percentage point per year, Jackson found.

That's true enough: The International Labour Organization recently found that Canada has had the second-highest wage growth among the developed economies of the G20.

All the same, nearly half of the metro areas covered by StatsCan actually saw inflation-adjusted wages fall during this period, including Toronto (down 2.8 per cent) and Vancouver (down 3 per cent).

That’s worrisome, because these two cities saw sizeable jumps in the cost of living during that time. Toronto house prices grew by some 37 per cent between 2006 and 2012, while Vancouver house prices grew about 62 per cent, according to Teranet’s house price index.

Change in wages, 2006-2012, by province (story continues below)

Source: Broadbent Institute

The “rust belt” cities of southern Ontario were particularly hard hit, with Windsor seeing a massive 13.6-per-cent decline in wages, followed by Oshawa (down 6.5 per cent) and St. Catharines (down 4.1 per cent).

All four of the B.C. metro areas surveyed saw declining wages, led by Abbotsford (down 5 per cent) and Victoria (down 4.8 per cent).

Overall, Ontario (down 1.7 per cent) and B.C. (down 2.4 per cent) were the only provinces to record wage declines during that time.

Some cities saw tremendous wage growth, mainly those that benefitted from the energy boom that is now decidedly over.

St. John’s, Nfld., led the way with a 23.9-per-cent increase in wages, with Saskatoon (up 17.8 per cent) and Regina (up 15.2 per cent) following.

Provincially, Newfoundland was the hands-down winner, with wages there rising 37.7 per cent (albeit from a relatively low level). Saskatchewan came in second (up 25 per cent) while Alberta took third (up 12.9 per cent).

But falling oil prices are likely to put a damper on those strong wage hikes, Bank of Canada Governor Stephen Poloz said this week, as he unveiled a surprise lending rate cut.

“We have an oil price shock which will reduce the income flowing into Canada, and lead probably to some increase in unemployment over all,” Poloz said.

Change in wages, 2006-2012, by metro area

Source: Broadbent Institute

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