Why has real wage growth been stagnating?

While lower productivity is usually blamed, note the relationship between the unemployment rate and wage growth

. When unemployment was high, wage growth was low and vice versa . Three factors elevated the unemployment rate since 1975: the influx of baby boomers, women entering the work force and the offshoring of jobs to low-income countries.

Since all three factors have now plateaued, expect Canadian wages to grow faster in real terms for many years to come. The implications for retirement are twofold: OAS will shrink as a percentage of the average wage and workers will need to save more.Retirement Income for Life.

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