Something is wrong in Alberta. Over the last decade, while the economy boomed and industry thrived, real wages in the province stagnated.
Real wages (adjusted to constant dollars to correct for inflation) measure what we are actually able to buy with our paycheques. In 1992, when the national economy was emerging from a brutal recession, the average weekly wage in Alberta (in constant 2001 dollars) was $676.79. In 2002, after a decade of “boom times,” the figure was just $676.14.
What’s important here isn’t the minor decline in real wages (about 0.1%), it’s that they remained stagnant during a period when they should have been growing.
We live in the richest province in Canada and our economy is creating wealth at a rate that is the envy of other regions. Year after year, we rack up the strongest economic growth and job-creation numbers in the country.
To top things off, Alberta also boasts high levels of labour productivity. According to the provincial government’s own calculations : “Alberta’s total economic productivity increased at an average annual rate of 1.3% between 1991 and 2001, which was the highest rate in Canada.”
Common sense and standard economic theory say that when productivity goes up, so should wages. In the words of former U.S. president John F. Kennedy, a rising tide is supposed to lift all boats.
But that’s not happening here in Alberta. The question is: why? Why haven’t Alberta’s growth and productivity gains translated into increasing real wages, as economic theory tells us they should?
A major part of the answer lies in the labour market policies of the Klein government. Alberta has:
1) The lowest minimum wage in Canada (about ninety cents an hour lower than the national average).
2) Some of the lowest welfare rates in the nation, rates deliberately kept at near-starvation levels to “encourage” welfare recipients to accept any jobs, no matter how low the pay. This policy ensures that minimum wage job vacancies will not go unfilled.
3) The most anti-union labour laws in Canada. The Alberta Labour Relations Code fails to protect the rights of workers who want to join a union. As a result, Alberta has the lowest unionization rate among provinces.
The point is that these policies don’t just affect poor people, welfare recipients, or unions – they exert a downward pressure on wages that filters through the entire labour market.
Right-wing pundits and political commentators have convinced many Albertans that allowing the government to attack these “special interests” would somehow benefit the rest of us. But an economy is not a zero-sum game: wage gains won by others don’t detract from our well-being. On the contrary, improving wages for one group of workers often means improving wages for others.
When employers and employees negotiate – formally through collective bargaining, or informally as individuals – a number of factors determine the outcome. The wages being paid to other workers in the same labour market are an important one of these factors.
Laws that punish the poor or hamstring unions don’t make things better for the rest of us, they help depress everyone’s wages. That’s the “Alberta Advantage” in a nutshell: energy revenues and a low wage economic policy. When it comes to wages, it turns out the “special interest” group that is being kept down is not some faceless union or welfare mob: it’s all of us.
The thing Albertans should be asking themselves is this: are we willing to allow this trend to continue? If we don’t improve real wages during the boom times, what will happen when we hit an economic downturn?
Alberta is a wealthy province blessed with abundant natural resources and a highly productive workforce. We don’t need or deserve government policies that deliberately victimize the poor and hold down wages.
Tom Fuller is a senior researcher with the Alberta Federation of Labour. His new booklet on wage stagnation in Alberta, entitled Running to Stand Still, was released this week.