Methodology for The PayScale Index (Canada)

The PayScale Index tracks changes in what full-time employees earn over time.

What The PayScale Index Measures

The PayScale Index tracks quarterly compensation trends. Specifically, it tracks changes in total cash compensation for full-time, private industry employees in Canada. The PayScale Index has not been adjusted for inflation. It is based on actual wages. In addition to a national index, it includes separate indices for six Canadian metropolitan areas.

  • The full-time employees included are those who work for an employer on an hourly or salaried basis.
    • Temporary contract, piece-work and self-employed workers are not included.
    • Employees working less than 30 hours per week for one employer are not included.
    • If an employee works for multiple employers, full-time earnings from only one employer are considered when analyzing trends in compensation.
  • Total cash compensation is defined as all cash payments earned by an employee during a year of full-time employment.
    • Total cash compensation includes base salary or hourly wages, overtime wages, bonuses, commissions, tips, and profit sharing.
    • Total cash compensation does not include retirement plan contributions from employers, health insurance, company car privileges, travel allowances, or other non-cash benefits. It also does not include equity (stock) compensation.
    • At this time, The PayScale Index does not take into account lost income due to temporary layoffs or furloughs. Regular, consistent earnings are assumed.
  • The PayScale Index measures the change over time in what an employer must pay to fill a specific job with a worker who has certain skills, abilities, education, experience and other compensable factors.

How The PayScale Index Is Calculated

The PayScale Index utilizes a unique approach to index (trend) measurement. Unlike indices such as the Consumer Price Index, which measures the prices of certain goods and services (periodically updated to reflect changes in buying habits), The PayScale Index uses data on all types of full-time employees working in a given time period.

This approach is possible because PayScale has performed a detailed analysis of how various compensable factors, like work experience, education, employment setting and job responsibilities, affect pay. This analysis is based on PayScale’s extensive data of over employee profiles, accounting for 250 compensable factors for more than unique job titles, which show how the pay of actual workers varies with each of these factors.

PayScale has detailed data for each individual worker – who provided information on their compensation (salary, bonuses, etc.) and compensable factors (work experience, education, etc.) – at a particular point in time (e.g. Q2 2007). Using this analysis, PayScale can then calculate what a similar worker with the exact same compensable factors would earn at a different point in time (e.g. Q1 2010).

For The PayScale Index, we evaluate the difference between these two pay figures for over 300,000 employee profiles in each quarter. The aggregate difference reflects changes in pay over time, and forms the basis of The PayScale Index.

How to Use The PayScale Index

The PayScale Index’s view into compensation trends can be used in several ways.

Employers can use The PayScale Index to understand overall trends in compensation and how average wages are changing nationally and by metropolitan area. For market pricing of a specific job or employee, we recommend employers use PayScale’s Market Pricing and Compensation Solutions for Employers.

Political and business leaders can use The PayScale Index to understand trends in how much income full-time workers have available to spend.

Individual employees can use The PayScale Index to understand how the market prices (expected wages) for their services as employees are changing on average. This is separate from changes in their experience level or responsibilities which could also impact their individual market price. To get a more precise salary range for your exact position or job offer, complete the PayScale Survey to get a free personalized salary report.

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