The average hourly wage in B.C. across all-industries rose 4.1% to $26.77 in 2018. This increase was well ahead of the 2.9% Canada wide gain and nearly twice the pace typically seen in B.C. Having wages grow more quickly in B.C. is unusual: typically, average wage growth in B.C. is lower than or occasionally in line with the national benchmark. Robust wage growth speaks to comparatively tight labour market conditions in the province.
Young age cohort sees biggest increase
Recent wage gains differ across age cohorts. Consider three cohorts that can be described as younger workers, core working aged workers, and workers over the age of 55. In 2018, the younger group – workers aged 15 to 24 years – saw a 7.4% jump in the average hourly wage, the biggest gain among the three age cohorts. Because many young people, especially those just entering the workforce, earn at or near the minimum wage, the government-mandated 11% hike in the statutory minimum wage was a significant factor lifting the average hourly wage for this age group.
What industries had the biggest wage gains?
Stronger wage growth was broadly based last year, with most industrial segments posting an increase above their five-year average growth rate. Across all service industries the average hourly wage grew by 4.1% last year. The increase across all goods-producing industries was 4.5%.
Wage growth already moderating
Higher frequency data suggests that wage growth in the province has already eased from the robust pace seen last year. Looking at quarterly data shows that wage growth peaked in the second quarter of 2018. It moderated in the third quarter and by the final quarter of 2018 it had retreated to around 1% annually. The breakout by age groups shows that the 15-24-year cohort is still enjoying fairly strong wage growth, reflecting the ongoing impact of the higher minimum wage.
- In 2018, the average hourly wage in B.C. rose by just over 4%, the strongest increase in a decade. Wage growth in B.C. was well ahead of the Canadian benchmark and was the strongest of any province. B.C.’s average hourly wage rate was lower than the Canada-wide average, but last year’s gain meant that the gap essentially closed.
- Amid near-record low unemployment rates, tight labour market conditions fuelled wage growth. The 11% increase in the provincial minimum wage implemented in June 2018 was also a factor in the strong wage growth.
- When averaged over five year periods, B.C’s average hourly wage has consistently outpaced inflation over the past two decades, resulting in small real wage gains.
- Younger workers enjoyed the largest average hourly increase, reflecting the rise in the minimum wage. Workers 55 years and over also saw comparatively solid wage growth in 2018.
- Stronger wage growth was broadly-based, with most industries recording a gain in 2018 well above typical wage increases.
- The upswing in wage growth already appears to be moderating; quarterly data show that by the end of 2018 annual growth in B.C.’s average wage had reverted to around 1%.