Profits vs. Wages in Saskatchewan and Newfoundland

Jim’s recent mini-study emphasized that profits now occupy gargantuan shares of GDP in the oil-rich provinces. He and The Jurist have noted the total disconnect between corporate profits and personal income in two of those provinces: Saskatchewan and Newfoundland. To explore this issue further, I have pulled some figures out of the recently-released 2007 Provincial and Territorial Economic Accounts (in billions of dollars):

 

Â	 2002	 2007	 Change
 Profits – Canada	 $135.2	 $210.4	  56%
 Profits – SK	 $ 4.8	 $ 12.5	 160%
 Profits – NL	 $ 3.7	 $ 10.9	 195%
 Wages/Salaries – Canada	 $593.3	 $782.3	  32%
 Wages/Salaries – SK	 $ 14.6	 $ 19.6	  34%
 Wages/Salaries – NL	 $ 6.9	 $ 9.8	  42%

 

Impressive GDP growth in Saskatchewan and Newfoundland has been driven more by ballooning corporate profits than by rising employment income. Over the past five years, the annual profits of corporations operating in Saskatchewan increased by $7.7 billion while the annual earnings of people working in Saskatchewan rose by $5 billion. In Newfoundland and Labrador, corporations collected $7.2 billion more while workers earned $2.9 billion more. Despite Premier Williams’ valiant efforts to retain economic benefits for local residents, total corporate profits from The Rock now exceed total employment earnings on The Rock.

In percentage terms, profits have grown about three times faster in Saskatchewan and Newfoundland as in Canada as a whole. However, labour income has grown only slightly faster in these provinces than in the rest of the country. Since population growth was slower in Saskatchewan and Newfoundland, the increase in per-capita income was somewhat more impressive.

However, the fact remains that the explosion of resource-industry profits has not translated into correspondingly higher incomes for the people of Saskatchewan and Newfoundland. In both provinces, profits have increased nearly five times as fast as employment earnings.