Whose wages are rising? The answer will shock and maybe even delight you

Everyone wants their wages to catch up to inflation, but no one wants inflation to grow. Is that possible?

You bet. In fact, wage growth has eclipsed inflation since February 2023. Year-over-year growth in average hourly wages has hovered around five per cent since then, even as the pace of inflation has fallen in Canada.

You’d never know it from the news, but inflation-adjusted average hourly pay rates have caught up to their pre-pandemic values in Canada, and even gained some ground. A whole lot of people are seeing solid wage gains.

I worked with Statistics Canada to find out whose wages went up. The trends surprised me.

The untold story of wage growth is upward mobility

The lowest-paid workers in Canada — or those in the bottom quartile of wage earners — earned $19 an hour or less in 2019. There were more than 3.4 million of them. By 2023, there were 1.5 million fewer people working at that wage level.

The middle quartiles grew: 92,000 more people had jobs paying between $19.01 and $26.29 in 2023, and 730,000 more were working at jobs earning between $26.30 and $38.38 an hour.

But the biggest and most stunning change? More than 1.8 million people came into the top quartile of wage distribution, making more than $38.38 an hour. By 2023, an astounding 5.3 million workers were paid at least that rate across Canada.    

Ontario’s trends match Canadian trends, which feature more women exiting the poorest-paying jobs to get better-paying ones. Fantastic news! Unsurprisingly, slightly more men than women entered the top pay group, but there’s been impressive progress for women there, too.   

Wage growth has been fastest for the lowest paid

The top wage for the bottom quartile of employees rose faster than any other group from 2019 to 2023, a signal that the work of the lowest paid is becoming increasingly valuable to employers.

That upper threshold of $19 an hour in 2019 had risen by 21 per cent in both Canada and Ontario, exceeding inflation. Men in the lowest-paid jobs saw a bigger gain than women.

Average wages of those in the middle and top have grown too, but at a pace that either matched or lagged inflation. Women have seen slightly better results than men in each of these higher wage quartiles in most parts of the country, but not in Ontario. 

Alberta and Saskatchewan have seen the least wage growth, far behind inflation; Prince Edward Island and New Brunswick the most. Ontario tracks the national average in most ways, except that men’s wage gains have outpaced women’s across the job market.

Wage growth comes from a changing economy, not just bargaining for more

Using the most recent published data, the biggest source of growth in new jobs between July 2019 and July 2024 comes from a category Statistics Canada calls “professional, scientific and technical.” It’s the kitchen sink of categories, including legal services, accounting, architecture, engineering, scientific research, advertising and technical consulting services such as website, platform and software development.

That sector added 370,000 jobs over the past five years. Ontario has an outsize share of that growth (more than half). On average, these jobs offer the second-best pay in the job market and saw some of the strongest wage growth in the country. Between 2019 and 2024, average wages in this sector jumped to $50.78 from $36.74 an hour in Ontario — a 38 per cent spurt, well ahead of inflation. This sector is the single biggest driver of average wage growth, and a major reason the top wage quartile expanded so fast. 

High demand doesn’t mean high wage growth

The second powerhouse of job growth is the health and social assistance sector, creating 316,000 new jobs across Canada in the past five years. Ontario represents almost half of that growth.

It includes nurses and technicians, personal care workers and therapists, child-care workers and shelter workers, a mix of high- and low-pay work. Wages haven’t kept up with inflation in Ontario, where average wages grew to $33.91 from $28.74 an hour since 2019 (an average 18 per cent increase, compared to inflation of 18.3 per cent). Given the demand and job vacancies still going begging, why have we not seen more wage growth here? Maybe more lower-paid workers have been hired since 2019. Maybe tight purse strings on public-sector collective agreements are containing wage growth.    

The surprising sources of the fastest wage gains

Sometimes the biggest spikes in wage growth come from unexpected places. Canada-wide, the most rapid wage gains since 2019 have gone to agricultural workers (a 48 per cent increase on wages that started at $18.89 an hour, on average). The sector now has fewer workers than in 2019.

Meanwhile, the fastest wage gains in Ontario are in the utilities sector, with few new jobs. Utilities workers enjoy the highest average pay everywhere across the country. In Ontario, average pay was $42.36 an hour in 2019. Five years later, it was $61.27, a whopping 45 per cent increase.

You win some, you lose some

In the past five years, we’ve added 1.5 million jobs, even as we’ve shed 115,000 low-paying jobs for salesclerks, workers in hotels, bars and restaurants, building cleaners and construction labourers.

At the other end of the spectrum, management jobs have ballooned. There are almost a third more managers across Canada now than in 2019. Almost half of those 380,000 new bosses are in Ontario. These lucky workers have seen, on average, a 30 per cent wage jump. Women make up 41 per cent of the management class.

More people are moving out of the lowest-paid jobs. More people are moving into the highest-paid jobs.

Isn’t upward mobility what we all hope for in our own lives? When broad-based uplift happens, as it has since 2019, it can boost the whole economy from the bottom up, without triggering more inflation. It’s not fearsome. It’s fabulous.

But will it last?