money? many firms are doing just that. however, other factors must be holding back wages, or the national numbers would be higher. as far as i can tell, no one has found a smoking gun. but there are at least a couple of compelling suspects. the first is that it might be difficult to find the right person for the job. attracting the right talent is rarely just about money. i can tell you, in my business it is not easy to find all the specialized talent the bank needs. estimates suggest that about 1 out of every 10 jobs in canada is affected by mismatches between the skills that the job requires and the skills that workers actually have. 9 the sectors with skills shortages are no surprise : the share of these industries in total employment has fallen by nearly half a percentage point over the past five years to 17 per cent. based on data from statistics canada ’ s monthly survey of employment, payrolls and hours, average year - overyear wage growth in 2018 was 2. 8 per cent in the services sector compared with 1. 8 per cent in the goods sector. for more detail, see employment and social development canada, “ canadian occupational projection system ( cops ) : imbalances between labour demand and supply ( 2017 - 2026 ) ” ( 2017 ) and related documents. health care and the digital economy top the list. meanwhile, sectors like manufacturing and natural resources have a surplus of people with the required skills. the second suspect is a sense of caution. people may be reluctant to search for a better job even if they would like one. the data bear this out. turnover in the canadian job market, a process known as job “ churn, ” is relatively low these days. 10 higher churn usually means higher wages, because the people willing to change jobs — to trade up — typically drive wage gains in the economy. job churn is especially sluggish in oilproducing provinces, where wage gains have been most restrained. 11 as a comparison, job churn in the united states has recovered more quickly, in part because the oil price shock was positive for the us expansion. that churn has supported us wage growth. another suspect is geography. canada is a beautiful country, but its sheer size does not help. the data show that canadians have become more open over the past few decades to relocating for new opportunities. 12 still, it is no small thing to pull up stakes and move to a new city or province, often far from

. this uncertainty means that it is imperative to look beyond such measures of “ full ” or maximum employment toward other indicators of labour market slack. in this instance, the bank has pointed to relatively subdued wage growth as a possible sign that the job market may have more room to run. economic theory tells us that when the actual jobless rate is at the natural rate, an economy is essentially at full employment. at that point, we would expect wages to be rising at the same pace as the target inflation rate plus the trend rate of productivity growth. this is because the strongest underlying factors that determine worker pay in real terms are how productive workers are and their value to an employer ’ s production process. 4 so, for canada, this implies wage growth of around 3 per cent — 2 per cent for inflation and 1 per cent for trend productivity growth. wage growth has picked up considerably to average about 2½ per cent in 2018, compared with 2 per cent over the past five years. 5 but we are still shy of what one would expect in a tight labour market. the story is similar in the united states. the us jobless rate has been below 4 per cent for a while. this is much lower than the estimate of the us natural rate — currently pegged at around 4½ per cent. 6 yet, wage gains only recently reached the sum of inflation and productivity growth. in canada, regional and sectoral factors can explain a lot of why wage growth has been tame. the steep drop in oil prices that occurred in the second half of 2014 had an impact that rippled across canada and is still being felt. wage gains in energy - intensive regions continue to lag behind those in the rest of the country. to give you a sense of how big a deal this is, wage growth in the third quarter of 2018 was just under 2 per cent in alberta, saskatchewan, and newfoundland and labrador. it was about three - quarters of a percentage point higher in ontario and quebec, so closer to the 3 per cent one would expect. for more detail on how wages are determined, see the economy, plain and simple article that we released today. this is according to the bank of canada ’ s composite wage measure, called the “ wage - common. ” this measure is created by extracting the common signal from four sources of wage data ( the national accounts ; the productivity accounts ; the survey of employment, payrolls and hours ; and the labour force survey ) and filtering out indicatorspecific