[lbo-talk] Query: U.S./Canada Wage Differential

T Fast tfast at yorku.ca
Sat Jan 31 11:06:08 PST 2004


The question of wages breaks down along sectors and depends of course on the exchange rate and payroll taxes. On the question of taxes there is also the need to proceed with caution because it depends on which taxes and who is paying them, i.e., employee or employer.

For example, in the auto industry, Canada has a slight competitive advantage because given existing productivity rates, exchange rates and universal health care both wages and benefit costs are lower in the CDN auto sector than in the US auto sector (google "Jim Stanford" and you will find more details).

As I understand it there are rather large intra-national variations in the US in terms of average minimum wages and payroll taxes and this holds true to some extent in Canada as well. Hence even for low wage occupations it depends on which province and which state you are comparing.

Anyway check out the BLS, they have aggregate international comparisons of labour costs for manufacturing from 1975 to 2003

ftp://ftp.bls.gov/pub/special.requests/ForeignLabor/supptab.txt

What you will find is that in the aggregate Canada has lower average hourly compensation rates than the US. The growth in the gap during the 1990s was the result mostly of a relatively undervalued CDN dollar relative to the US.

Travis

----- Original Message ----- From: "mike larkin" <mike_larkin2001 at yahoo.com> To: <lbo-talk at lbo-talk.org> Sent: Saturday, January 31, 2004 1:33 PM Subject: [lbo-talk] Query: U.S./Canada Wage Differential


> I found myself arguing with someone the other day
> about whether wages are higher in the U.S. or Canada.
> I assumed they were roughly equal, but I was assured
> by this America-Firster that wages are much lower in
> Canada. I assumed taxes are higher, but wages? Would
> anyone know?
>
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