Real wages rising, except for smokers and drinkers
CJAD 800 AM, Montreal’s main English-language radio station, wanted to talk to me about the new poll CBC has been riffing off of all week long, the one about how Canadians are “conflicted and worried” heading into this fall’s federal election. The poll says the main thing bothering people is the cost of living—which must be disappointing for social justice warriors and will also surprise the Bank of Canada, which has kept the cost of living rising at a boringly consistent two per cent a year ever since it started targeting inflation in the early 1990s.
My first thought about the poll is that it’s not exactly fake news but rather concocted news. If a news organization has money, which the CBC does (thanks to us taxpayers), one easy way to fill pages or minutes during the slow summer news season is by commissioning a poll.
A second thought is that it’s a funny poll. As the CBC website tells us, it’s not your usual random-sample phone survey. Rather, it was put together using the “Maru Voice Canada” panel, which is a group of several thousand Canadians who have agreed to answer survey questions on line in exchange for small payments. As the CBC says—on its website though not on its broadcasts—“Because the sample is based on those who initially self-selected for participation… rather than a probability sample, no estimates of sampling error can be calculated.” Self-selection is a big problem in statistics. It’s not at all obvious that people trying to monetize their free time in this way will have opinions typical of the rest of us—especially about such things as the cost of living.
Third thought—the questions asked weren’t open-ended but came with defined options. The question about being worried read: “What, if anything, are you most worried about? (My health/health of a family member, cost of living, climate change, crime and public safety, terrorism, my job/finding a job, immigration, international relations/trade agreements, truth in the media, racism, social inequality, none of these issues worry me).”
CBC seemed surprised that “cost of living” was the option chosen most often—even if by only 32 per cent of respondents. Next most worrisome was climate change, at 19 per cent. I don’t know: If I were asked to choose from that list, I’d probably say “cost of living,” too—even though I’m not especially worried about it, given, as I say, the Bank’s success at hitting its two per cent target. (I do wish the target were lower, however! Prices should be stable over time.)
To go through the checklist:
- My family members are all healthy (touch wood!)
- I’m afraid climate change doesn’t keep me awake at night (since there’s little use worrying about what it’s very hard for any one person or even any one country to change)
- Where I live crime, public safety and terrorism aren’t—or at least haven’t yet been—big issues
- I’m retired so don’t have job worries anymore (though my children do)
- I’m mildly worried about how open our overland border is, but only mildly
- Yes, I’m also worried about trade agreements, though—unlike most Canadians, I expect— my worry is that so many generally good agreements are being so flagrantly violated by the large man in the White House
- Truth in media I address as everybody should, by relying on media outlets I trust (though I do also watch CBC)
- I don’t believe racism is a big problem in modern Canada and it’s very likely a smaller problem than in decades past
- I’m interested enough in income inequality to have written a whole book about it but my argument was that poverty, which the survey question doesn’t mention, is a more serious problem than inequality
In sum, “cost of living” might well be my answer, too, though I’m not really concerned that the Bank will soon move to a policy of higher inflation.
Prepping for my radio spot, I checked out how the price level has been doing lately and whether wages and incomes have been keeping up. In short, should people be so worried about the cost of living?
StatsCan Table 18-10-0005-01 tells us that from 2014 through 2018 the consumer price index (all items) increased 6.6 per cent—so less than the policy target of two per cent a year. It’s true the prices of some things outpaced inflation. The people who should really be worried are smokers and drinkers, since the cost of tobacco and alcohol rose 14.5 per cent. The rising cost of housing gets a lot of attention these days but in fact the cost of shelter rose at the same 6.6 per cent as the all-items CPI. Food was up 7.2 per cent, not that much more than the average of all prices.
On the other hand, clothing and footwear were only up 1.4 per cent and both gasoline and energy in general experienced a decline in price (of -1.3 and -1.5 per cent, respectively).
Are workers keeping up? Generally, yes. StatsCan Table 14-10-0134-01 tells us that over the same four years wage rates rose 9.8 per cent for employees who weren’t union members or covered by a collective agreement and 8.1 per cent for those who were. So though wages weren’t running dramatically ahead of prices they were ahead, which means “real wages” did rise.
As for incomes, StatsCan traces those at a lag. But StatsCan Table 11-10-0017-01 tells us that between 2012 and 2016, the latest four-year period for which data are available, median before-tax incomes outpaced inflation for all main demographic groups it tracks. For “all family units” it was up 8.6 per cent, for “couple families” 9.3 per cent, for lone-parent families fully 14.9 per cent (more than twice the rate of inflation) and for persons not in census families 7.6 per cent. (Increasingly, and maybe with good reason, low-earners not in families are the focus of social policy.) In each case, however, median after-tax incomes were up by a little less, which means taxes have been taking a larger bite out of people’s incomes in all these groups.
Unfortunately, when the red light went on CJAD had technical difficulties with their phone line so my four-to-five minute interview turned into more like 90 seconds and I wasn’t able to get to any of this.
So now my main worry is that Canadians are making decisions about how worried they should be without access to the full facts of the matter!
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