Pay it forward
Noisy wage data hard to interpret
By Rob Roach, ATB Economics 28 April 2023 2 min read
Seasonally-adjusted average weekly earnings* (including overtime) in Alberta decreased for the third month in a row in February 2023.
New data from the Survey of Employment, Payrolls and Hours show that employees in Alberta were earning, on average, 0.5% less per week in February than in January with declines in 12 of the 20 major categories.
Weekly earnings are volatile month to month, and can be heavily influenced by compositional shifts in employment and hours worked.
On a year-over-year basis, average weekly earnings in Alberta were, however, still 1.3% higher than in February 2022.**
In the same survey, another measure of wages showed a much stronger increase. The average weekly earnings of hourly employees went from $905.72 in February 2022 to $974.60 a year later for a rise of 7.6%.
The average weekly earnings of salaried employees went the other way, falling from $1,726.38 in February 2022 to $1,678.47 in February 2023 for a decrease of 2.8%
With the rise in the earnings of hourly workers pulling in the opposite direction of the fall in the pay of salaried workers, the new data gives few clues as to what to expect for future wage growth in the province.
A falling (but still elevated) job vacancy rate, decelerating inflation and slower economic growth due to high interest rates point to a potential easing of pressure on wage growth.
At the same time, labour market conditions remain relatively tight and the cumulative effects of high inflation will have workers looking to make up the lost ground by way of future pay increases.
Unfortunately, given the ongoing noise in the wage data—due in part to the lingering effects of the pandemic and the rapid changes in economic conditions brought on by high inflation and the aggressive interest rate hikes—we will have to wait for more data before we can determine if Canadian wage growth slows as the Bank of Canada expects, but will be strong enough to compensate for higher than normal inflation rates.
*Change in average weekly earnings can reflect a range of factors including changes in wages, composition of employment and hours worked.
**The monthly Labour Force Survey (LFS) provides an alternative source of wage data, but is considered less accurate than the Survey of Employment, Payrolls and Hours in this regard. According to the LFS, average weekly earnings in Alberta were 5.0% higher in February on a year-over-year basis.
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