7

Real wages decline

Inflation outpaces wage hikes nationwide


 

The purchasing power Canadians get from their paycheques is failing to keep up with the cost of living, making it harder for many people to make ends meet, the Globe and Mail reports. New figures from Statistics Canada show that the average weekly wage increase over the past year was 1.1 per cent, the slowest rise since November 2009. Meanwhile, inflation is close to three per cent, meaning real wages have declined. Furthermore, rising commodity prices are translating into higher energy and food costs for Canadians. The new numbers also point to a widening income divide between the western provinces, which are benefitting from an ongoing commodity boom, and the former manufacturing heartland of central Canada.

The Globe and Mail


 
Filed under:

Real wages decline

  1. And folks wonder about the Occupy movement.

  2. According to the Keynesians, this isn’t supposed to happen. They assert that inflation isn’t caused by loose monetary policy, but that rising wages are required to push up production costs and increase aggregate demand (i.e. cost push & demand pull inflation). Of course, they’ve never been right about anything. Krugman is still arguing that we need more inflation and more deficit spending. Well duh. 

    • This *is* cost push and demand pull inflation.  Have you taken a look at interest rates lately?

      The problem is that our demand pull is way outstripping our actual production because we are, especially the investors, so hooked on cheap credit to make our money.

      • You’re correct about the hooked on cheap credit. As for cost push, it is only an intermediate step in the inflationary cycle caused by excess cash sloshing around, which in turn is caused by cheap credit. The economy isn’t growing. We’re in a classic liquidity trap (Keynes was right about that, I’ve got a lot more respect for the man himself than his followers) and simply pushing more credit and debt will not change that fact. It will only create more problems. We need to be prepared to tough out a very long, grinding recession, and we need to avoid the temptation to throw billions in fiscal and monetary stimulus at it in an effort to paper it over. We did that in 2008. Where are we now? Japan’s been doing it for 20 years. Where are they now? We avoided the chemo, but the cancer is still there. 

  3. it is clear that government monopoly on credit and the creation of ‘legal tender’ is proving to be disastrous to the individual’s liberty and prosperity.

    • Sarcasm?

      Since the 1970s, it’s been the private sector which has had a monopoly on creating tender. If you’d read a book every once in a while, you’d learn that the “governments are irresponsible, they cause inflation…” – why don’t you read a decent essay?

      http://www.rudemacedon.ca/dlp/box/box01-money.html

  4. Yes and how can this still be news, it has been happening since the 60s. If you really want to stir people up try a chart showing incomes/ cost of living increases on a realistic income every year from 1960 to 2011, then people will see the real reason for ‘inflation controls’.
    The real meaning for inflation is an economy that keeps pace with cost of living, keep it below that and you have a favorable situation for controlling society.

Sign in to comment.