The pay rates advertised by employers for new openings are growing at a markedly slower pace compared with the middle of 2022, according to new data from job-search giant Indeed.
A new tracking tool from the company shows wages advertised in job postings on Indeed’s Canadian site were up 4 per cent in May compared with the same month in 2022. While that growth rate was still well above prepandemic trends, it was also below the pace of year-over-year wage growth recorded around the middle of last year, which peaked at 5.3 per cent in August, the data show.
The slowdown in those increases suggests that “hiring is becoming easier for some employers,” Indeed said in a report released on Wednesday. “If the deceleration continues, wage pressure on inflation could ease, but worker purchasing power might rebound more slowly after getting hit by high inflation.”
The report came just as new data from Statistics Canada showed that the country’s inflation rate was running at a still-hot 3.4 per cent annual rate in May. While that was down from 4.4 per cent in April, it was still considerably above the Bank of Canada’s inflation target of 2 per cent.
The central bank raised its trend-setting interest rate by a quarter of a percentage point to 4.75 per cent earlier this month, voicing concern about a surprisingly resilient economy and strong labour market.
But the data from Indeed could be an early sign that wage pressures in the labour market are beginning to ease off somewhat, said Brendon Bernard, a senior economist at the company.
The pay rates employers advertise in job ads generally affect broader earnings trends, as they serve as a starting point for salary negotiations for new hires and also often affect remuneration for existing employees, Mr. Bernard said.
“The wages of new and existing employees can’t be just taken separately,” he said. Employers “are often wary of having a two-tier system of some people jumping ahead on the wage front,” Mr. Bernard added.
While Statscan provides a similar gauge of wages offered, those numbers are published quarterly, with the latest data currently capturing the period between January and March. Indeed, on the other hand, is planning to publish its own advertised wage data on a monthly basis, as it’s already doing in other countries, according to Mr. Bernard.
Indeed’s data show overall wage growth steadily decelerating since August, 2022, with higher-paying jobs leading the decline. Fewer job ads and flatlining posted wage growth for some job types in the tech sector, which has been roiled by cost-cutting and layoffs after swelling during the pandemic, has contributed to weaker wage growth for Canada’s higher earners.
Slow wage growth for health care practitioners such as nurses, whose compensation is often heavily regulated and bound by collective bargaining agreements, has also been dragging down wage growth for higher-paying jobs, Mr. Bernard said. Overall, wages advertised for higher-paid jobs on Indeed were up just 2.8 per cent in May compared to the same month a year earlier.
On the other hand, wage growth for lower-paying occupations, such as entry-level jobs in the retail sector and the restaurant industry, remained the strongest, growing at 4.9 per cent in May from a year ago. For mid-paying jobs, such as blue-collar occupations in manufacturing, wage growth was 3.9 per cent over the same period, according to Indeed.
Indeed’s low-, mid- and high-paying job categories are based on a wage spectrum that uses 2021 as its reference year, Mr. Bernard said. Low-paying jobs are those that had median advertised wages below $18.50 an hour in 2021. For mid-wage positions, the median hourly pay ranged between $18.50 and $21.20, with anything above that ranked in its high-wage job category.
Posted wage growth continuing on its downward trajectory would be good news on the inflation front, Mr. Bernard said. But unless wage growth declines more slowly than consumer price growth, Canadians won’t be able to claw back some of the purchasing power their paycheques have lost to inflation, he added.
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