Why We'd Rather Be in Canada: Wages Up

With the release of the second quarter (Q2) 2011 PayScale Index, we added tracking of national pay trends for Canada. The striking difference is how much better Canadian wages have bounced back from the recession than in the United States.

In this blog post, we will look at Canadian trends in pay over the last 5 years, and see what the PayScale data about Canadian wages through the first six months of 2011 tell us about how the demand for workers is recovering.

Finally, we will look at other economic measures, like unemployment and gross domestic product (GDP) growth in Canada, and see if Canadian workers' wages are subject to the same supply and demand forces we have been seeing in the PayScale Index for the United States.

National pay trends are interesting, but are wages for your job trending up? Find out with a free PayScale salary report.

The following two charts say it all. These are from the Q2 2011 PayScale Index Report:

Quarterly Compensation Trends for National (CA)
The PayScale Index uses 2006 average total cash compensation as a baseline.
National (CA)
Quarterly Compensation Trends for National (US)
The PayScale Index uses 2006 average total cash compensation as a baseline.
National (US)

The painful difference is that Canadian wages are bouncing back, up about 1.5 percent in the last year or so, while US wages are unchanged over the same time period.

So while Canadians are enjoying wages today (in Canadian dollars, not adjusted for inflation) greater than the peak in 2008, the typical US worker has wages about 1.5% lower than in 2008, and even heading slightly downward in Q2 2011 vs. the quarter before.

Why are wages rising faster in Canada? The reason for this is simple. Employment is up in Canada, and unemployment down, while in the US employment is virtually unchanged over the last year, and unemployment is staying high.

In the last 1 1/2 years, employment in the US is up less than 1 million in a workforce of 139 million. In contrast, employment in Canada is also up a little under 1 million in the same time, but that is for a workforce of only 17 million workers. The Canadian 5% employment growth in the last 1 1/2 years is a lot better than the US 0.7%.

The net result is that Canada currently has 7.4% unemployment, while the US is still at 9.2%.

What about the price of goods? Over the last 1.5 years, the exchange rates have the CA dollar rising about 10% vs. the US dollar. That means anything Canadians buy now from the US effectively has a 10% discount relative to the beginning of 2010.

Finally, the Canadian economy, as measured by real gross domestic product (GDP) is even growing faster: over the 12 months through about April 2011 (latest data available), Canadian real GDP is up 2.8%, while the US is up only about 2.3%.

Cheaper goods, lower unemployment, faster growing economy, and rising wages - all in all, I'd rather be in Canada :-)

Who knows what the future will bring, but are you being paid what you are worth now? When you want powerful salary data and comparisons customized for your exact position or job offer, be sure to build a complete profile by taking PayScale's full salary survey.

Cheers,

Al Lee
Director of Quantitative Analysis, PayScale, Inc.

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