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Potash Corp.'s Rocanville facility in Saskatchewan. Once a salary laggard, Saskatchewan now features a weekly wage higher than the national average. (DAVID STOBBE/DAVID STOBBE/REUTERS)
Potash Corp.'s Rocanville facility in Saskatchewan. Once a salary laggard, Saskatchewan now features a weekly wage higher than the national average. (DAVID STOBBE/DAVID STOBBE/REUTERS)

Economy Lab

How resource economies drive provincial wage gains Add to ...

Last week, Statistics Canada published the October data from its Survey of Employment, Payrolls and Hours (SEPH) which provides a good review of average weekly wages across Canada by province and by industry. Instead of just looking at the month over month or even year over year data, I went back to October, 2002, to see how the wage picture has been changing over a longer period of time.

More related to this story

As might be expected, the resources-based provincial economies are witnessing strong growth in average wages relative to the national growth rate while the rest remain stagnant or are even falling behind.

In October, 2002, the average weekly wage (including overtime) in Saskatchewan and Newfoundland and Labrador was more than 9 per cent below the Canadian average. By October, 2011, both provinces feature an average weekly wage higher than the Canadian average.

In October, 2002, Alberta had an average weekly wage that was 2.9 per cent higher than the national average. In the same month in 2011, Alberta featured an average weekly wage 18.5 per cent higher. To put this in perspective, on an annualized basis, in 2002 the average worker in Alberta earned $1,000 more than the average Canadian worker. By October, 2011, the wage spread had increased to more than $8,000 per year.

At the same time the traditional wage laggards -- Prince Edward Island, Nova Scotia and New Brunswick -- have not made up any ground relative to the national average wage level. In October, 2002, New Brunswick average weekly wage was 9.7 per cent below the national average and by October 2011, it was 10 per cent below. The average Alberta worker now earns $16,600 more than their counterparts on Prince Edward Island.

Ontario and Quebec are actually losing ground compared to the national average wage level. In October, 2002, Ontario had an average weekly wage nearly 6 per cent above average but by 2011 the average wage premium had dropped to only 2.2 per cent. If the current trend continues, the average weekly wage in Ontario will fall below the national average by 2016.

We can tell from the wage survey where at least some of the new wealth from the resources boom is ending up. In 1998, the average weekly wage in the public administration sector in Newfoundland and Labrador was more than 22 per cent below the national average. Now it is 3.3 per cent above. That is a monumental shift in wages over a short 11 year period. A similar, but less pronounced story is found in both the health care and education sectors.

There are similar average wage swings in both Alberta and Saskatchewan. Wages in the health care sector in Alberta have gone from below average in the early 2000s to well above by October, 2011.

The Survey of Employment, Payrolls and Hours provides more evidence of the changing economic landscape in Canada. Provinces with a large quantities of oil, gas and other mineral resources are pulling away from the rest.

The resource rich provinces are younger, growing more rapidly and generating more wealth. Governments are investing some of the proceeds of this new prosperity into public sector spending.

RBC Economics is forecasting the Saskatchewan and Newfoundland and Labrador governments will run budget surpluses in fiscal 2011-2012. In stark contrast, Moody's Investors Services recent put the Ontario government on a credit watch because of the province’s ballooning debt and weak growth projections. The remaining have-not provinces will also face serious challenges trying to put their books in order.

There is a lot of talk these days about the Harper government and its vision of a more hands-off federal government when it comes to areas of provincial jurisdiction. It will be interesting to see how this vision will play out in light of the growing provincial economic disparities across Canada.



David Campbell is an economic development consultant and columnist based in Moncton. He also authors a daily blog on economic issues in Atlantic Canada which can be found at www.davidwcampbell.com.

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