A new strike season is unfolding. Will higher wages bake in higher prices for us all?

In this three-part series, contributing columnist Armine Yalnizyan explores the connection between wage growth and inflation, and what it means for our future costs of living.
Do you have wage rage? A lot of people do. Workers who want payback for years of sacrifice as companies go from near collapse to record profits. Workers covering the tasks of unfilled job openings or layoffs with no extra pay. Workers who are losing ground to inflation as others make dramatic wage gains.
From railway workers to airline pilots, a new strike season is unfolding. Expect the volume on the wage rage dial to get cranked up. More people will get angry about workers getting more as their own wages stagnate, and worry others’ gains will bake in higher prices, further eroding their purchasing power.
Is wage growth for some a problem for all? No.
Let me show you why.
Last fall two major historic union settlements made headlines. Rightfully so.
Ford workers like Rajendra, who has worked full-time on an assembly line at an auto plant for 20 years, made around $65,000 before inflation hit. In 2023, Unifor settled for a 10 per cent pay rise in the first year, two and three per cent in the next two years, as well as a one-time $10,000 signing bonus, among other improvements. He’ll be walking away with $16,500 more this year than last, though $10,000 of that is a one-shot wonder. 
Sound outrageous? You’re forgetting the sacrifices Rajendra and his co-workers made in the wake of the global financial crisis in 2008 to save the big Ontario automakers.
Or take Winnie, who has worked for the same grocery store since 2012. Because of her seniority and full-time status, both rare in this sector, she made $20.55 an hour when inflation was soaring. At $42,000 a year before taxes, she was making more than most clerks.
But when she and her son got renovicted from their two-bedroom apartment close to where she worked in 2022, she couldn’t afford another place nearby. She had to spend more money on housing and transit, and more time commuting.
Last fall she and her union went on strike and settled for a $2 an hour increase for full-time workers, not much for a mid-career desk worker but a 10 per cent increase for her. That was the first strike by grocery workers in Ontario since 1996, when workers lost full-time jobs, pensions and benefits.
This year Winnie will be making $4,100 more than last year. By the end of the five-year deal her hourly wage will be $25.05, or $9,300 more than in 2022, when inflation sizzled at a pace last seen 40 years ago. 
Both auto and grocery stores now enjoy soaring profits, profits that came at least in part from cutbacks to workers’ wages and benefits. We see the feast. We forget the famine. Unless we live through it.
Like most things in life, bargaining is a function of time and place. Negotiating a collective agreement is always specific to the industry, the geography, the phase of expansion or contraction.
Some settlements are truly eye-popping and consequently newsworthy. They grab our attention, though they may not be the new normal.
But are we all paying the price for others’ success? No.
Labour is rarely the biggest cost of production. It accounts for 12.5 per cent of the ticket price in grocery stores, five per cent in vehicle manufacturing.
Here are three things to keep in mind about wage growth:
• Big wage increases for whole groups of workers are a rarity. Since inflation spiked in 2022, only a handful of collective agreements — notably in manufacturing, parts of retail such as grocery stores, and construction — saw increases that outpaced inflation.
About 20,000 autoworkers and 4,000 grocery workers won the historic deals that dominated news headlines last fall. There are almost 18 million employees in Canada.
The big settlements grab attention, but they don’t reach enough people to move the needle on inflation.
• Most workers aren’t represented by a union. Unions negotiate on behalf of only 29 per cent of the workforce. That falls to 15 per cent in the private sector.
But even where there’s strength in numbers, most unionized workers’ wages haven’t caught up to inflation.
You may not like unions, but they’re not the cause of inflation.
• In late 2022 the Bank of Canada warned of the dreaded wage-price spiral, where workers’ attempts to catch up to inflation spur another wave of inflation. But according to the International Monetary Fund, historical evidence shows that wage-price spirals are extremely rare (Germany after the First World War being one instance).
The typical pattern — a spike, then a slowdown in inflation, as well as accelerating wage growth followed by weakening employment conditions, both at least partly due to central bank rate hikes — reflects today’s dynamic. As inflation slows and unemployment rises, it’s harder to negotiate for more. Wage and price growth revert to long-term trends.
Expect headlines to foment rage about union power; but wage growth isn’t just about bargaining for more. In fact, the bargaining power of unionized workers isn’t what’s moving the needle on wage growth, as the chart shows. Instead, wage growth in Canada is coming from something unexpected and unsung: upward mobility.
That’s the surprising story we’ll visit next in Friday’s column. Come for the rage. Stay for the uplift!