Inflation is making people unhappy about how much money they earn.
Year-over-year wage growth is running around 5 per cent, and inflation most recently hit 6.9 per cent. The gap between pay increases and inflation makes people feel poorer, but there’s another aspect to our feelings of unhappiness about pay.
A tight job market has created strong demand for workers in some sectors, and employers have in some cases responded with much higher wages to attract and retain workers. Stories about people negotiating better wages at either their existing place of work or a new one circulate widely. A new poll suggests a lot of people aren’t benefiting from this trend, and they’re not happy about it.
The poll, conducted in October by Leger, asked its 1,534 participants if they see themselves as receiving fair compensation. Just 45 per cent said yes, while 43 per cent said no and the rest were either unsure or said the question wasn’t applicable to them.
The high level of dissatisfaction with pay helps explain another poll finding – 84 per cent of participants said they support the idea of a salary transparency law requiring employers to disclose salary ranges in job postings. Pay disclosure is in the news because New York City introduced a law Nov. 1 that requires employers to show salary or hourly wages in job postings.
Salary transparency is seen as a way of improving the fairness of compensation in the workplace. In the poll, 61 per cent said it would increase pay equity for genders and racial minorities. Forty-seven per cent of participants said they would be comfortable with having their salary information made available to others.
Pay is becoming a hot topic at an inopportune time. The rate increases being used by the Bank of Canada to fight inflation are slowing the economy and a recession is possible next year. Even as labour shortages in some sectors persist, some employers will look at cutting their work force. Check out the latest edition of our Stress Test personal finance podcast for some thoughts on how to navigate today’s job market if you’re looking for more pay.
If you’re thinking of changing jobs for better pay, you’re in good company. The Leger poll suggest 24 per cent of people in the work force at considering leaving their job in the next year, and 23 per cent aren’t sure.
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Rob’s personal finance reading list
Women who earn more than their partners
I read this all the way through because the stories are so interesting – 21 women talk about what it’s like to earn more money than their partners. Mostly fine, but there are issues sometimes. Now for a bizarre aspect of today’s job market – employers often cannot find qualified applicants. Suggests more negotiating leverage for job seekers on salary, benefits and flexibility to work at home.
Credit lessons learned at the school of hard knocks
A recent graduate reports on his challenges paying off his student loan and credit card bills. Some smart suggestions at the end from a credit counsellor.
A Liberal promise-tracker
A list of promises made by the federal government on housing, taxes and other financial matters, with notes on the status of these proposals.
Buy and hold forever stocks
An investing blogger looks at some blue chip stocks with a history of paying dividends. A good starting point for people who want to build a portfolio of stocks, and more experienced investors may want to cross-check what they own against this list. Now for a lesson on how hard it can be to pick stocks, with Meta Platforms (formerly Facebook) and other tech stocks used as an example.
We want to hear from you
Has inflation got you down? Are you struggling to save? Do you despair of ever owning a home? Are you learning how to invest? Do you care about retirement? The truth is millennials and Gen Zs have a different set of challenges when it comes to getting their finances in order. Paycheque project is a non-judgmental look at how much young adults in Canada are earning - and how they are spending their money. To participate, please email the Globe’s pesonal finance editor Roma Luciw at firstname.lastname@example.org You can read previous paycheque projects, here, here and here.
Q: I have been working hard over the last few years to build an emergency fund and anticipate hitting my goal of six-month reserve by the end of the year. I’ve found a lot of advice online for building a fund, but not a lot of advice of what to do with the money once I’ve hit this goal. Can you provide any guidance on this? I’ve been wondering what the best kind of account is for holding these funds and if a portion should be invested in short term commitments, or just never touched unless needed?
A: First, a hearty congrats for reaching the magic six-month mark for your emergency fund. Incredible. Overall, the most important goals for money in an emergency fund are safety, easy availability and a decent return. A high interest savings account ticks these boxes, with rates as high as 3.75 per cent right now. For larger emergency funds, putting a segment in a cashable GIC could make sense if you get a competitive rate.
Do you have a question for me? Send it my way. Sorry I can't answer every one personally. Questions and answers are edited for length and clarity.
Today’s financial tool
Try CanadianPreferredShares.ca if you’re researching preferred shares. There’s a premium version of the site, but some information is free.
The Money-Free Zone
This will set you right: Look Up, by the Harlem Gospel Travelers.
Rent or run? Presenting one real estate agent’s take on the worst condo in Toronto.
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More Rob Carrick and money coverage
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Even more coverage from Rob Carrick:
- 🎧 Catch up on Stress Test: Is the middle class dead for millennials and Gen Z? • Gas prices are soaring. Are electric vehicles an affordable solution? • Crypto is booming, but should you invest? • How are young Canadians dealing with soaring rents? • Inflation is squeezing our finances. What can we do about it? • Is a hot housing market squeezing Canadians out of their small towns?
- ✔️ The housing file: How bad is housing affordability? Even a crash won't help • Sell the family home to lock in profit and then rent? Better not • Why young adults can't afford houses: Hard work got you more in the past than it does now • Five reasons you should not buy a house till you're at least 30 • Now more than ever, owning a house is not a retirement plan
- 📈 Investing: The 2022 ETF buyer's guide: Best Canadian equity funds • The 2022 Globe and Mail digital broker ranking: Does the zero-commission revolution flip the script on who's best? • With bonds sinking, conservative investors are waking up to risks they never saw coming • A five-step plan for dealing with the sad fact that almost every investment is falling lately • The best financial advice in advance of retirement? Work on your marriage • One-year GICs are the best deal in town for safety seekers • What to do if the financial plan you paid thousands for disappoints
- 💰 Your money: Are you prepared for the pandemic wealth boom to blow up in our faces? • This hard-working 24-year-old is nailing it financially. But where’s the happiness? • Who should and shouldn’t worry about the wave of rate increases this year, and what every stressed-out borrower should do right now • Don’t make this potentially costly assumption about the CPP Survivor’s pension