Trends in Low Wage Employment in Canada : Incidence, Gap and Intensity, 1997-2014

Summary: This paper introduces two new concepts to the debate on job quality: the low-wage gap and low-wage intensity. These two measures provide information on the depth and severity of low wages. Using Labour Force Survey microdata, we discuss trends in these two measures,along with trends in the incidence of low wages over the 1997-2014 period. For example, in 2014, 27.6 per cent of all employees aged 20 to 64 years earned less than two-thirds of median hourly wages for full-time workers aged 20 to 64 years (or $16.01 per hour), our low-wage cutoff. In this same year, the low-wage gap was 21.0 per cent, which means that the average lowwage employee earned approximately 79.0 per cent of the low-wage cutoff (or $12.66 per hour). Consequently, low-wage intensity, defined as the product of the incidence and the gap (scaled by 100) was 5.8. This is down from an intensity of 6.3 in 1997, which was the result of a slightly higher incidence (27.9 per cent) and a higher gap (22.7 per cent). This paper also provides these results by gender, age, educational attainment, industry, occupation, employment status and province. These detailed results help identify which groups face the highest rates, greatest depths, and largest intensities of low-wage employment in Canada. Furthermore, this paper explores the implications of a $15 minimum wage on the low-wage gap in 2014. Finally, to provide a brief sensitivity analysis, we discuss (1) the results for low-wage employment in Canada using a different cutoff (two-thirds mean hourly wages for full-time employees aged 25 to 54 years) and (2) comparisons of our results to those of CIBC’s Employment Quality Index and the OECD’s low-pay data.