The 'Alberta Advantage' has been a concept frequently touted by the government when trying to attract new workers, but a recent study done by Alberta Central revealed that the advantage is not as strong as it once was. When comparing Alberta's numbers to 2019, a clear decline is shown. 2019 was chosen as the benchmark as to "remove the distortions caused by the pandemic."
While there are still areas where Alberta shines — Albertans' disposable income is around 14% higher than the rest of the country and employee compensation is around 15% higher — Albertans' purchasing power has declined by 3.6% while the Canada-wide average shows an increase of 3.3%. This is an underperformance of 6.9%, which the study notes "is quite considerable given the relatively brief period of about three years."
The most telling example of Alberta's decline is when comparing real wages, which is the term given to the amount of money you earn after factoring in the current rate of inflation. Albertans' real wages have declined by an average of 5.2%, while the rest of the country has seen an average increase of 1.2%.
What could be causing this economic decline? While Alberta Central made it clear in their study that a separate study to analyze the reasons behind this decline would be done, early results can rule out inflation. The study says inflation has looked consistent across the country, so Alberta isn't alone when struggling with rising costs. In fact, Alberta actually saw the lowest cumulative price increase, meaning our province fared better than the rest. Despite this, real wages have gone down.
"Smaller price increases should have led to an outperformance if wages and income grew at the same pace as the rest of the country," the study said.
With inflation out of the picture as a potential cause, the study points towards an increased labour supply as a potential reason.
"The strong migration to Alberta, both interprovincial and international, is keeping the supply of workers higher than in other parts of the country, thereby reducing wage pressures."
The study also mentioned Alberta's boom-bust economic cycle; since our economy is tied so closely to the energy industry the study suggests "after years of excess demand for labour in the 2000s and the first part of the 2010s, which drove wages well above the national average, we are seeing a return to normal with a convergence in wages toward the levels seen in the rest of the country."
Despite these concerning trends, Alberta still remains at or above the national average in several metrics like wages and incomes, but the continued decline means the province is falling closer to the average, thus weakening the 'Alberta Advantage'.
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