Ontario wage gains not keeping up with cost of living

A typically little-noticed gauge of the labour market is going to get more attention in the coming months, as economists question whether Statistics Canada's higher-profile jobs survey is capturing an accurate picture of employment in the country.

Statscan's second-tier payrolls report, released Thursday morning, is more than a month behind the main Labour Force Survey, limiting its value in normal times. However, after the last LFS showed a nationwide employment gain of 82,300 jobs in March -- the most since 2008 and the fourth-largest increase ever -- some analysts said the month probably wasn't that good, and the previous six months, which showed little to no job growth, maybe weren't that bad.

So they will be paying closer attention to the separate "survey of employment, payrolls and hours," or SEPH, a little more than usual to do some well-after-the-fact cross-checking. This is healthy, and as Statscan learns to live with budget cuts, it might not be a bad idea to find a way to merge the two reports so together they can paint the most accurate picture achievable. In February, for example, the SEPH survey showed a drop of 19,000 paid positions; the LFS survey for the month had indicated a decline of 2,800.

Regardless of fluctuations between the two surveys, one thing is clear, and has been for a while: wages in Ontario are not keeping up with the cost of living.

The February version of SEPH shows that, once again, Ontario had the weakest year-over-year wage growth of any province – a 0.7 per cent gain in average weekly earnings, to $899.90. Saskatchewan had the strongest, a 5 per cent gain, to $905.98. The numbers reinforce long-standing trends: earnings growth in Ontario has been lower than the national average since October, 2010; in Saskatchewan, wages have exceeded the national average since last August. (The following month, weekly earnings in Saskatchewan were higher than in Ontario for the first time.)

Commodity prices are easing off highs reached last year, but that is doing little to bridge the divide between new have and have-not regions. In the resource-rich West, workers are benefiting from the commodities boom and a scramble by companies to attract skilled labour. In the old manufacturing powerhouse of Central Canada, entire one-horse towns are dying, and workers are in no position to ask for pay raises to keep up with energy and food inflation.

Nationwide, average weekly earnings were 1.8 per cent higher than in February, 2011, although hours worked per week down, "pointing to some underlying softness," noted Emanuella Enenajor of CIBC.

Either way, national averages obscure how static wage growth is in Canada's most populous province, which is losing ground against jurisdictions all over North America in terms of per capita economic output, and where employment in manufacturing is near record lows. The payrolls report was the last thing Ontario Premier Dalton McGuinty needed, just a day after Standard & Poor's cut the province's outlook because the agency is skeptical he can meet belt-tightening targets in his budget.

It's also not clear that efforts to fill labour shortages in faster-growing provinces will easily benefit idling workers in Ontario, even if they're willing to re-locate. Bank of Canada Governor Mark Carney told a Senate committee Wednesday evening that governments can help get rid of some of the "considerable slack" in the national jobs market through training programs and by removing barriers that make it tough for the unemployed to move from province to province. Still, he acknowledges this is a long process that will not bear much fruit overnight. In a speech earlier this month, he noted, "Workers in declining industries may not have the skills or experience to match immediately the needs of employers in expanding industries."