Inflation Is Far Outpacing Wage Growth

Canadians are falling behind as Liberal-NDP policies continue to damage our economy.

Some defenders of the Trudeau government like to claim that inflation isn’t a big deal because wages are also going up.

The problem with that is the fact inflation is rising far faster than wages.

Not only are any wage gains being wiped out, but those wage ‘gains’ are – in real terms – the equivalent of falling wages.

It’s all relative

Something that doesn’t get nearly enough attention in our discussion of the economy is that what matters isn’t any set number, but the relationship between different numbers.

For example, if your wages were cut 10%, but prices declined 20%, you would be richer. You would be able to buy more.

By contrast, if your wages doubled in a year but prices tripled, then you would be poorer.

With that in mind, it makes perfect sense that more and more Canadians feel like they are falling behind:

Because they are.

As noted in a recent BNN Bloomberg article, inflation is about double wage growth in Canada:

“The disconnect between wage growth and inflation is being put under the microscope by the chief economist of BMO Capital Markets.

In a short note to clients, Doug Porter pointed out that wages are only rising around three to 3.5 per cent year-over-year, less than half the rate of Canada’s “steaming” (in Porter’s words) cost of living after Statistics Canada’s consumer price index surged 6.7 per cent year-over-year in April. He described the gap between those two metrics as “simply unsustainable,” particularly given Canada’s tight labour market.”

This is another important consideration.

With the unemployment rate falling, some would see this as making the government worthy of praise.

But look closer:

We have a country were people are increasingly desperate, can’t keep up with rising prices, are working jobs – often insecure jobs – that don’t fully pay the bills, and are mired in debt.

On top of all of that, we have an entire generation that is increasingly being priced out of the housing market – in a country with an almost absurd abundance of land.

It’s easy for the government to throw a bunch of money all over the place and provide a temporary employment boost, and of course, we know the unemployment rate doesn’t consider those who have given up on looking for work.

None of that is a credit to the government.

Instead, the surging inflation rate, economic stagnation, and millions of people falling further and further behind is a clear indictment of the policies being pursued by the Liberal-NDP pact.

Big-government statism has caused the problems Canada is facing, and only a return to limited government, sound money, lower taxes, and more freedom can turn things around.

Spencer Fernando

Photo – YouTube


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