Do we have a wage shortage, not a worker shortage?

While many employers have said that they just can’t find the workers they need, a new report suggest there’s a different problem.

Instead, there’s a “wage shortage”, not a worker shortage, according to the Canadian Centre for Public Alternatives (CCPA).

Case in point: 63 per cent of job postings are in industries where the wage offered by employers is below the minimum wage that unemployed workers are looking for, according to the February and March 2022 Labour Force Survey and the Job Vacancy and Wage Survey from Statistics Canada.

“One of the key worker reasons for not taking jobs is that the jobs are lousy,” says David Macdonald, senior economist at the CCPA. “One of the key ways that a job is lousy is that the pay is too low. Given the disruption in work experienced earlier in the pandemic, followed by sky-high inflation, expecting 10 people to apply for a $15-an-hour job isn’t realistic.”

“For most job postings, higher pay is the problem, not unwilling or missing workers. Job seekers are waiting for employers to show them the money —and to offer good working conditions too.”

Among Canadian workers considering changing jobs in the next six months, 88 per cent say compensation is the most important factor, according to a separate survey by ADP.

But more than half (55 per cent) of Canadian employers are turning to larger than normal increases of wages, according to a report from the Bank of Canada.

Weaker industries

On average, Macdonald says salary offers are not living up to what workers’ want in the following industries:

• manufacturing
• transportation and warehousing 
• public administration
• agriculture
• construction
• accommodation and food services 
• educational services
• business, building and other support services
• retail trade

Specifically, in the accommodation and food services industry – which represents 14 per cent of vacant jobs – the average posting offers $15.85 an hour, but workers aren’t willing to work for less than $18.84 an hour.

In the retail trade industry – which represents 10 per cent of all vacant job postings – employers are advertising jobs that pay $17.85 an hour, but workers aren’t going to work for less than $23 an hour.

“These industries aren’t suffering from worker shortages, they are suffering from employers who are unwilling to increase wages enough to make it worth a worker’s while,” says Macdonald.

More than one-third (36 per cent) will look for a new job with higher pay if they don’t get a raise at the end of this year, according to another study.

Worker shortages

However, Macdonald does say that employers with worker shortage in the following industries have salary offers that are above worker expectations:

• wholesale trade
• professional, scientific and technical services
• health care and social assistance
• utilities
• information, culture and recreation
• finance, insurance, real estate and leasing
• forestry, fishing, mining, quarrying, oil and gas

Four out of five Canadian employers say they would consider hiring applicants who do not have a degree or certification to the job they’re applying for, and that they would instead offer on-the-job training for new hires, according to a survey of 1,000 employers from Indeed.