Wages Advance Mightily in U.S.; Maintain Moderation in Canada

Concerning the cost of doing business, a lot of attention has been focused lately on sharply rising material input prices. Compensation rates aren’t sitting around, twiddling their fingers, or just being apathetic.

Wages Advance Mightily in U.S.; Maintain Moderation in Canada Text Graphic

There are many sources of information about the wages paid to workers in Canada and the United States. However, it would be logical to first look at the data provided by Statistics Canada and the Bureau of Labor Statistics (BLS), respectively, in their monthly Employment Situation and Labour Force Survey Reports. They are included with the most recent job numbers, so they have an official stamp.

Tables 1, 2 and 3 below are taken from the September BLS Employment Situation Report Table B-8. Wage rates for production and nonsupervisory workers are the hourly and weekly wages. This means that bosses are not included in the hourly and weekly wage rates. Table 3 below condenses and summarizes material appearing in Table 11 of Statistics Canada’s September Labour Force Survey. It provides information on pay increases and how they compare to non-union workers.

Tables 1 and 2 are comprised of 19 lines, but seven of those lines are summaries. It is important to note that the wage results for twelve major subsectors are displayed.

From Table 1, when hourly wage rates as a level are ranked from highest to lowest, construction ($30. 79) places fifth. Interestingly, it’s way ahead of manufacturing ($24. 18) in the tenth spot. Utilities ($40. 00) is number one. In the lowest two positions are retail trade ($18. 68) and leisure and hospitality ($16.71).

Construction (+5.8%) is fourth in Table 1. This table shows hourly wage rates ranked according to percent changes year-over-year. Number one is leisure and hospitality (+12.9%), where the exaggerated increase is due to activity in the sector being inordinately weak a year ago. As a result of the increased demand for logistics services, transportation and warehousing workers saw a positive increase (+8.6%).

From Table 2, when weekly wages as a level are ranked, construction ($1,259) is in fourth place after utilities ($1,696), mining and logging ($1,504), and information ($1,340). High occurrences of part-time work push retail trade ($573) and leisure and hospitality ($416) to the bottom.

From Table 2, when weekly wages as year-over-year percent changes are ranked, construction (+10.2%) moves up to second position, just ahead of mining and logging (+10.1%), but in the runner-up spot to leisure and hospitality (+13.8%).

According to Table 3, Canadian workers don’t see the same rapid year-over-year wage increases as those in the U.S .8%. However, American year-overyear increases in wages for all jobs are much faster than Canadian rises which are usually close to +2.0%.

The highest increase in Table 3’s average weekly earnings for non-union Canadian workers is +2.6%.

Table 3 also contains two additional takeaways. Canada’s non-union-covered workers are seeing slightly higher wage gains over the past year (+2.3% hourly, +2.6% weekly) compared to those who are union covered (+1.0% hourly, +1.3% weekly). Full-time workers (+2.3%) have more earnings per hour than part-time workers (+1.1%).

Table 1: U.S. Average Hourly Earnings, Production & Nonsupervisory Workers on Non-Farm Payrolls

Among the 12 major sub-sectors shown above, construction currently ranks 5th for level of hourly earnings and 4th for year-over-year change in hourly earnings.

Data Source: Table B-8, Employment Situation report from Bureau of Labor Statistics (BLS).

Table: ConstructConnect.

Table 2: U.S. Average Weekly Earnings, Production & Nonsupervisory Workers on Non-Farm Payrolls

Among the 12 major sub-sectors shown above, construction currently ranks 4th for level of weekly earnings and 2nd for year-over-year change in weekly earnings.

Data Source: Table B-8, Employment Situation report from Bureau of Labor Statistics (BLS).

Table: ConstructConnect.

Table 3: Canadian Workforce Earnings

Year over Year, September 2021

Moving in Right Direction: Week ending Aug 28 2021 = 340,000 (-14,000 vs previous week's 354,000) Lowest since Mar 14, 2020's 256,000.

Based on not seasonally adjusted (NSA) ‘current’ dollar data.

‘Current’ means there has been no scaling back to remove the effects of inflation.

Data source: Statistics Canada.

Chart: ConstructConnect.

Other Labor Market Developments

From Table 4, the U.S. jobs claw-back ratio relative to the big decline in total employment that occurred between February and April of last year is now close to 80%. That’s a commendable achievement. What about Canada’s performance? Why isn’t Canada’s performance better? Canada has achieved a full recovery of its total jobs count that existed before COVID-19 rode into town on a pale horse and forced nearly everyone to take shelter at home.

Graph 1, shows that the not-seasonally adjusted (NSA), unemployment rates in Canada and the United States have remained nearly the same for a while. Statistics Canada uses the same methodology used south of the border to calculate Canada’s R-3 numbers.

Table 7, and Graph 2, respectively, examine the labor markets in Canadian provinces. British Columbia has the highest year-over-year employment increase (+6.1%), which is higher than the national advance (+4.0%), and a lower unemployment rate (5.9% than the seasonally adjusted total Canada figure of 6.9%.

As for the year-over-year increase in total employment in Canada, Ontario (with a 44.6% share) and B.C. (with a +20.6% share) combined are accounting for two-thirds of the jump.

Table 4: Monitoring the U.S. employment recovery – September 2021

the U.S. recovery ratio, versus the scary plunge from February to April of last year, has improved to 77.8%.

Data source: Bureau of Labor Statistics (BLS).

Chart: ConstructConnect.

Table 5: Monitoring the Canadian Employment Recovery – September 2021

Canada's recovery ratio, versus the scary plunge from February to April of last year, has improved to 100.0%.

Data source: Statistics Canada.

Table: ConstructConnect.

Table 6: U.S & Canadian Jobs Markets – September 2021

Canada experienced a slightly greater decline in total jobs count in the Spring of last year (-15.6% between Feb & April) than the U.S. (-14.7%) when lockdown measures were first adopted in both countries to combat the spread of COVID-19.

SA is seasonally adjusted / NSA is not seasonally adjusted.

U.S. U.S. labor data comes from a “payroll survey” whereas Canadian labor data comes from a “household survey”.

Cdn NSA unemployment rate known as ‘R3’ is adjusted to U.S. concepts (i.e., it adopts U.S. equivalent methodology).

Data sources: U.S. Bureau of Labor Statistics (BLS) & Statistics Canada

Table: ConstructConnect.

Graph 1: Canada vs U.S. Monthly Unemployment Rate (Percent)

Not Seasonally Adjusted (NSA) Data

(Statistics Canada Calculates ‘R-3’ on Same Basis as U.S. Rate)

On a same-methodology basis, U.S. & Canadian NSA unemployment rates have been moving nearly in tandem.

The latest data points are for September 2021.

Data sources (seasonally adjusted),: Statistics Canada and U.S. Bureau of Labor Statistics, Department of Labor.

Chart: ConstructConnect.

Table 7: Canada’s Provincial Labour Markets – September 2021

Ontario is currently accounting for the largest portion (44.6%) of the national year-over-year jobs increase. In second spot is B.C. (20.6%). Third and fourth places go to Alberta (14.8%) and Quebec (12.9%). By way of comparison, the shares of Canada's total population are: Ontario, 38.8%; Quebec, 22.5%; B.C. 13.5%; and  Alberta, 11.7%. ... Ontario and B.C. are 'punching above their weight' in jobs creation.

Data Source (seasonally adjusted figures): Statistics Canada.

Table: ConstructConnect.

Graph 2: Canada’s Provincial Labour Markets – September 2021

In September 2021, British Columbia was the only province to record an unemployment rate (5.9%) lower than the total Canada figure (6.9%) and a year-over-year jobs increase (+6.1%) greater than the country-wide advance (+4.0%).

Data Source: Statistics Canada.

Chart: ConstructConnect.

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About Alex Carrick

Alex Carrick is Chief Economist for ConstructConnect. He has presented throughout North America about the U.S., Canadian, and global construction outlooks. Mr. Carrick has been with the company since 1985.

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