The cost of living is rising, but so are wages

Inflation has peaked in a generation, driving up the price of just about everything. But this also applies to people’s work, as employers compete to meet their staffing needs.

Officially, wages have only increased by 3.1% over the past year, about half the official inflation rate of 5.7%. But because the pandemic has had an unprecedented impact on everything — including statistics — it can be helpful to compare things today to what they were two years ago, before COVID-19.

Inflation has risen by almost 7% in the two-year period to the end of February, and wage data shows an interesting split between people who have changed jobs recently and those who have stayed in the same.

This former group – which the data agency defines as anyone who has been in their current job for three months or less – saw their average hourly wages increase by 11.7%. That compares to a 7.2 percent increase, about the same as the rate of inflation, for those who stayed in their same job for more than 18 months.

These numbers suggest that in this job market, if you’re not getting a raise, it’s time to change jobs because chances are it will pay you more.

Darcy Clark, director of Montreal-based HR consultancy Normandin Beaudry, said competition for workers is fierce right now.

“Like the housing market, it is out of balance,” he said.

“Whether you’re hourly, production, salaried, management, executive and everything in between, it’s a talent war at every level.”

Companies regularly increase their compensation programs to meet their staffing needs. In the summer of 2021, companies that work with Normandin Beaudry said they expected to increase their compensation by 2.9% over the coming year — an all-time high, Clark said, but not blatantly.

Then, in the second half of the year, inflation took off, as did wage expectations. By the end of 2021, these same companies were now forecasting a 3.7% increase in their total compensation spend.

“That’s a huge increase, the highest I’ve seen in 20 years,” Clark said.

“Such rapid change meant companies were playing attack rather than defense,” to attract and retain workers, he said.

“I deserve more”

In this era of high inflation, workers from all salary backgrounds also expect their wages to rise, and if they don’t, many of them are showing that they are ready to leave to get a boost. higher salary.

That’s what Emilija Pruden did. The 27-year-old from Toronto worked at various jobs while studying to become a registered massage therapist, and she said she’s noticed a drastic change in the way work is valued lately.

WATCH | Employers are ‘catching up’ with wage gains, economist says:

Jimmy Jean, Desjardins Group’s chief economist, says wage increases will be the norm in 2022, due to growing labor demand. 0:36

Before the pandemic, she worked as an administrative assistant at a nonprofit for about $20 an hour, but saw her pay increase as she took on more and more leadership positions. By the time she left, she had managed to negotiate fewer hours of work each week, but at $28 an hour, so her paycheck hadn’t shrunk as much.

“I’ve seen huge changes in the way people approach work,” she said.

“Attitude [has] I went from feeling grateful to be employed to feeling more deserving of my work because it’s essential.”

She quit that administrative job when she graduated in late 2021. Massage therapists can charge between $50 and $200 per hour, but due to the physically demanding nature of the job, Pruden has no intends to do it full-time, so she supplements her income by working at Lululemon part-time. She said she was thrilled to see how much she and her colleagues were valued for their work.

Offer salary incentives

Retail jobs are often associated with minimum wage, which rose to $15 an hour in Ontario in January, but Pruden said she started at $17.25 an hour, with bonuses of up to $7 per hour based on sales targets. The company offers profit sharing and a generous benefits package, which is why she said she plans to stay with the company even if and when her massage business takes off.

In today’s market, she said any employer who fights back against minimum wage increases or only raises terms when forced to, is going to lose staff “because people don’t feel valued.”

Starbucks recently beefed up its compensation programs to ensure all of its staff are paid more than minimum wage. (Micki Cowan/CBC)

Aiden Heese is a former minimum wage worker who found himself climbing the income ladder quickly. The 26-year-old from Langley, British Columbia, started working at Starbucks about five years ago, earning what he thinks was the province’s minimum wage at the time, $12.65 l ‘time.

But he credits the company for rapidly upping its compensation game lately. Even before the pandemic, Starbucks began working to increase employee retention, raising its starting salary up to $1 above the local minimum wage, followed by increases of around 25 cents per hour every six months. . Add it all up and he now earns about 50% more per hour than he did when he started.

BC’s minimum wage is set to rise to $15.65 an hour later this year, but “I’m now making over $18 an hour after being there for 4.5 years, which doesn’t It’s not too bad, I guess, to be just a barista,” Heese said.

The “wage price spiral” is on

It’s not just those at the bottom of the pay scale who benefit. There are higher wages to be had throughout the economy. The construction industry is hot, to the point that companies find themselves paying new hires the same amount as people with 10 years of experience.

Matt Stainton, president of SG Constructors, recently tried to hire half a dozen new workers for a project, but after interviewing 50 people, he only managed to find two qualified candidates.

WATCH | New construction recruits earn what it took 10 years of experience to get:

Construction wages are rising rapidly

Matt Stainton, chairman of SG Constructors, says wages are up 30-40% from what they were before the pandemic. But he worries about what will happen to all those new recruits with less experience if and when a downturn hits. (Photo credit: Michael Charles Cole/CBC) 0:33

He said he pays people 30-40% more today than he did for the same work before the pandemic.

“We’ve heard about shortages in the supply chain and the same is happening with supplying people,” he said.

“We really struggle to find talent. It’s a real challenge.”

It’s a recipe for higher wages, at a pace unlike anything most economists have ever seen.

A “wage and price spiral is underway in Canada,” Scotiabank noted in a recent labor market report, while TD Bank economist James Orlando said in a recent report that the “febrile demand” for labor has meant that “workers haven’t had this level of bargaining power in decades.”

With so much leverage, Pruden’s advice to workers whose boss says they can’t afford raises this year is simple: Get a new job, because it’s likely to pay a lot more. .

“If they change and make an extra $30,000 a year, it can be life changing,” she said.

“So why the hell wouldn’t they change? You’d be foolish not to.”

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