Canadian wages for job changers are growing at a faster rate than that of job stayers, according to new research from ADP Research, the research arm of human resources and payroll management company Automatic Data Processing Inc.
Median base pay for Canadian job stayers, who have remained at their current employer for the past 12 months, posted a three per cent uptick year over year in August, according to the latest ADP Canada Pay Insights report. Median base pay for job changers, those who have switched jobs within the last 12 months, climbed 5.6 per cent.
“There is some bump that job changers experience from leaving one job and going to the other, but it’s notable that that bump has been modest at 2.6 per cent,” said ADP chief economist Nela Richardson during a media conference call.
Base pay refers to a worker’s contract rate of hourly wages or salaried pay, which is important to understanding labour market tightness and structural trends in wages, said Richardson during the call. Gross pay, which includes base pay as well as commissions, tips, bonuses and overtime, helps indicate labour market activity, such as the decision to work more hours, she added.
Median gross pay for job stayers was up 4.4 per cent compared with the 9.6 per cent boost that job changers saw year over year in August, according to the ADP report.
Richardson said gross pay data indicated there was a 5.2 per cent premium for job changers compared with job stayers. “What that tells you is that there is a lot of labour market activity,” she said on the call. “That’s an interesting and important sign to keep tracking over the next few months as we’re looking at wages as that bridge between inflation and the labour market.”
The ADP report, which was released Thursday, is the first edition of a new monthly labour market report tracking wage trends using anonymized payroll data of 1.6 million workers across Canada.
Nathan Janzen, assistant chief economist at Royal Bank of Canada (RBC), said ADP’s data on wage growth differences between job stayers and job changers is a measure that hasn’t been explored in other Canadian data.
“It is pretty standard and well accepted that wage gains tend to be bigger for people that are switching jobs,” Janzen said, adding this is a trend that has been observed in other countries.
However, with a weak economic growth backdrop, Janzen said people are more hesitant about changing jobs while employers are also less likely to hire due to the extra costs. “That’s one of the things that actually contributes to softer wage growth during a weaker labour market, and conversely, as labor markets start to strengthen, you tend to get more of those job switchers.”
By age, wage growth trends have changed significantly over the past three years, according to the ADP data. For the youngest age group in particular (aged 15 to 24), their median base wage growth plunged by half from 6.2 per cent in August 2023 (when all job-stayers posted median base wage growth of 4.2 per cent) to 3.1 per cent in August 2026.
On the other hand, their median gross wage growth climbed from 8.6 per cent in August 2023 (when the median for all job stayers was six per cent) to 9.5 per cent in August 2026, hovering above all older age groups.
Across the country, Prince Edward Island posted the greatest year-over-year increase in base pay for job stayers, at 4.2 per cent, while Yukon had the lowest change in base pay at 2.5 per cent. However, looking at gross pay, Yukon posted the greatest year-over-year increase at 5.3 per cent, while Manitoba was the lowest, at four per cent.
Janzen said wage growth across Canada has been balanced but is edging lower amid a softer labour market, trade tensions with the United States and reduced worker bargaining power in wage negotiations. He added that wage growth could potentially track lower than inflation in future months, depending on energy costs, which have so far driven consumer prices higher in recent months due to the war in the Middle East.
Inflation rose to three per cent in July, with the price of gasoline spiking 25.7 per cent year over year, according to the latest Statistics Canada data. In comparison, the latest payroll data from the agency showed average weekly earnings were up only 3.4 per cent in July compared with a year ago.
In a scenario where inflation exceeds wage growth, Janzen said Canadian households could start cutting back on spending or taking on more debt to sustain spending. With lower spending, this could negatively affect gross domestic product growth, lower hiring demand and further weaken labour markets.
“This is that supply shock that we’ve been worried about,” Janzen said. “The good news is that we haven’t seen that yet.”
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