economy
A PARADOXICAL WAGE JUMP AS EMPLOYMENT SLUMPS As wages “rise” in BC in the midst of the Great Suppression, many are surprised; history says they shouldn’t be.
It is a strange feature of economic downturns that oftentimes aggregate measures of income actually rise. There are numerous instances of this, but due to constraints on word count on this page let’s just consider the experience of the Great Recession: as job losses mounted in British Columbia through the latter half of 2008 and into 2009, median weeklywages for full-timeworkersseemingly began to accelerate, reaching as high as a 8.2% year-over-year increase by April 2009. How could this be, when so much slack was building up in the labour market? The reality is that many of those full-time workers earning wages during the depths of the Great Recession were higher-income- earners than those who had lost their jobs. In other words, with many of the lost full-time jobs being associated with lower-paying, full-time positions—and no longer included in the measure of median wages once the job was lost—the result was that the higher wages of the remaining
full-time workers gave the impression that compared to a year earlier, incomes had been dramatically increasing. In fact they had not. So describes the current economic environment in British Columbia, with year-over-year median wages for full-time workers rising by 9.8% in August 2020. To underscore the point made in the previous paragraph, median full-time weekly wages actually “rose” on a year-over-year basis by 18.3% in April—that’s right, at the bottom of the downturn. So while top-level wage estimates purport to paint a rosy picture for incomes, they really are, in the instance of the Great Suppression, a product of the nature of job lost versus those retained. Only as the recovery evolves more fulsomely will we develop a more accurate picture of how incomes have changed.
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