More or less. Here are the graphs. The implications?
…consider the hypothesis that US real wages are being held
back by competition from low-wage countries such as China. This is a
plausible story – we’d expect wages to converge eventually – but it
doesn’t square with the Canadian experience. If anything, we’d expect
the effect to be even stronger in Canada, what with the 40%
appreciation of the CAD against the yuan since 2002.
The pointer is from New Economist blog. And no, the difference is not there because the Canadians are caring people or because they did not elect that nasty Mr. Bush. Mexican immigrants won’t explain stagnant wages along the middle end of the distribution. One commentator has an intriguing suggestion:
Positive net employment change in Canada is most concentrated in the
high-paying energy sector in Alberta. A great proportion of the jobs
being created demand high-skilled workers. I wonder how much of the discrepancy in median incomes between Canada
and the US can be explained by the increase in job creation in Canada’s
energy sector relative to the type of job creation occurring in the US.
Entry-level workers in BC and Alberta are getting paid big bucks.
Might the United States have experienced sectoral shifts which are unfavorable for median wages but favorable for wages at the upper ends of the distribution? Another factor is that rising health care costs in the U.S. are absorbed into benefit costs but in Canada these costs are socialized to greater degree. In any case economists have yet to get to the bottom of this mystery…
Income wobbles relative to productivity and in the US was at a relative peak in 2000. I don’t know about Canada. At least part of the effect seen in the US graph is due to fact that 2000 was picked as the starting point. For a longer time series data for the US see
http://www.visualizingeconomics.com/
How ironic that economists, who used to bash Reagan relentlessly as being stupid,
have now created, via trade policy, “trickle up” economics.
Problem is, the trickle is turning into a torrent.
The commentator you cite, true dough, runs a nice econoblog of her own at http://truedough.blogspot.com/
It’s easy to get one’s fiscal house in order when one free-rides on
our military and health care.
And one is actually allowed to get to what we need to get to create energy.
ERF pays a nice divvy monthly, too!
Sandy p:
Huhhh????
Our boys coming home in boxes from Afghanistan are free-riding on your military?? It’s more like we’re cleaning up the 9/11 mess for you while you waste your time in Iraq.
As for health care, you’re welcome for all those cheap prescription drugs — we seem to be less inclined to enforce monopolies at the expense of our citizens’ health.
JohnDewey
The numbers don’t add up to the 11% shown on the graph for 2000 to 2005.Something is not right.
I just want to add that I meant that so long as we are in a commodities boom then wages will hold up better. In any bust of course the leverage cuts the other way regarding supply and demand of labor.
Here’s a five year summary taken from the Statistics Canada website:
Canada, Y2000 to Y2005
hours worked: +7.3%
hourly compensation: +14.7%
U.S., Y2000 to Y2005
hours worked: -2.7%
hourly compensation: +21.7%
I don’t know why Canadians are working more hours and Americans are working less. My guess is that it’s as much by choice as anything else. Many of my fellow Boomers are starting to scale back their careers: some for health reasons; some for wealth reasons; and some because the early retirement offer was just too good to pass up.
Does the lower measurable income inequality in Canada (Gini=.30 and stable
since the late 1970s) have anything to do with this?
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