One of the biggest factors when comparing Canada’s lagging wage growth to the United States is a difference in immigration levels between the two countries, according to Bay Street economist Benjamin Tal.

“To put things in perspective, [Canada] got 410,000 new immigrants in 2021. In the U.S., altogether, they got 500,000,” said Tal, deputy chief economist at CIBC Capital Markets, in an interview Friday.

“The last time I checked, the U.S. is ten times larger than we are. But the [level of immigration] is basically the same.”

Tal argued Canada’s mass immigration targets are helping ease our country’s labour shortage, which in turn is tamping down wage growth. In the United States, low immigration levels are exacerbating its labour shortage.

The latest jobs data from Statistics Canada on Friday showed hourly wage growth in Canada rose 2.7 per cent in December year-over-year, falling short of the average Bay Street estimate of a 3.2 per cent increase.

Tal also argued an increasing number of employers are reacting to rising wages and are increasing their productivity by investing more in automation to replace labour.

Canadian businesses created 54,700 jobs in December, more than double economist expectations. It capped off a record year for job creation – but Tal said this trend might not last.

“This labour market has been on fire but it will slow down. We know that December was before Omicron. Now, in January and February, it will be weaker,” he said.

“We’ve been through this game before. So, no big deal.”