The UCP’s Plan to Drive Down Wages Is Working

A new report by economist Jim Stanford shows how working people in Alberta are experiencing unprecedented reductions in incomes, purchasing power and living standards.

“Alberta’s Disappearing Advantage: The Crisis in Alberta Wages, and How to Fix It,” published by the Centre for Future Work and released at the Alberta Federation of Labour’s mid-term forum in Calgary on Saturday, shows how, by many measures, the crisis in living standards “has been worse in Alberta than in any other province.”

Importantly, Stanford wrote, “these challenges have been made far worse by deliberate wage-suppressing policies of the Alberta government.”

“These policies have prioritized expanding profits for corporations and business by deliberately restricting wages and job security for workers,” the report said. “Those policies have ‘worked’: profits in Alberta have grown to unprecedented heights, while workers’ share of the economic pie (and their real living standards) have declined.”

Among the key findings of the report:

• Alberta is no longer the wage leader among Canadian provinces.
• Real purchasing power of hourly wages after inflation is down five per cent since 2018 — for public sector workers it’s down as much 10 per cent.
• Despite record profits, real wages in the petroleum and mining sector are down.
• Alberta has the slowest wage growth among all provinces, but equally high inflation.
• The share of the Alberta economy going to labour compensation has dropped by eight percentage points, while the share going to corporations has skyrocketed — a “perverse redistribution” of wealth.
• Calgary and Edmonton are among the costliest Canadian cities to live in.

But the effects of the province’s wage-suppression policies suggest there should be longer-term concerns about Alberta’s economy, the paper argues.

There has been a loss in innovation momentum and falling productivity, Stanford concludes. “In contrast to the business-oriented rhetoric of the government, it is clear that its policy mix of favours for corporations, deliberate wage suppression, and austerity and privatization in public services, has undermined genuine growth, productivity and progress.”

With close to 250,000 unionized public and private sector workers in negotiations for new collective agreements, the report argues that 2024 presents a unique opportunity “to repair the damage to their living standards since the pandemic, to protect against the effects of future inflation, and to gain a share of future economic progress and productivity growth (through gradual real wage gains).”

We can count on it, of course, that the government of Premier Danielle Smith or its army of anti-union online bots won’t see things quite that way.

Real wage losses in the public sector have been particularly severe, Stanford wrote. “For them, the damage to living standards was amplified by aggressive wage-suppression strategies wielded by provincial negotiators during past rounds of public sector bargaining (in 2020 and 2021).

“Various top-down wage restrictions — including secret ‘mandates,’ threats of fines for employers, threats of legislation to block work stoppages, and more... made things worse.

“Public sector workers won cumulative wage gains of just three to four per cent over multi-year contracts, just as inflation accelerated,” he said. “These workers thus experienced a historic (and predictable) decline in their real wages: of as much as 10 per cent since 2020.”

As a result of the sustained weakness in wage growth, the report says, “Alberta’s once-vaunted superiority in wages is evaporating — and quickly.

“In 2013, average hourly wages for hourly employees were 17 per cent higher in Alberta than the Canadian average. The ‘Alberta advantage’ in this regard was obvious and undeniable. Today that advantage has shrunk to just three per cent.”

Alberta’s GDP is much higher in per-person terms than the Canadian average and the cost of living is also higher than in most provinces, the report notes. “Those factors suggest that wages should be higher in Alberta than elsewhere — yet that wage superiority, once taken for granted, has now largely disappeared.”

To counter the slide, Stanford suggests boosting minimum wages by at least 15 per cent, reforming labour laws to make it easier for workers to join unions, respecting the principles of free collective bargaining in the public sector, and strengthening the enforcement of basic labour standards.

Stanford, a native of Edmonton, is director of the Centre for Future Work and is the Harold Innis industry professor in economics at McMaster University in Hamilton, Ontario. He is an honorary professor in the department of political economy at the University of Sydney, Australia.

He received his PhD in economics from the New School for Social Research in New York and holds a master’s degree from Cambridge University.