Report

Minimum Wage Workers in Canada Over the Last 20 Years

In recent years, discussions surrounding the minimum wage, and its increase, have been at the centre of Canadian current affairs. The renewed interest in this topic stems mainly from high-profile campaignsNote  advocating for a federal minimum wage increase to $15 per hour,Note  as well as recent notable minimum wage increases in Ontario, Alberta and British Columbia. A recent report from the House of Commons identifies low-wage work as one of the key elements associated with precarious work in Canada.Note  In addition to lower wages, minimum wage workers are also less likely to receive non-wage benefits such as a pension plan, supplementary health benefits or paid sick leave.

There is no consensus as to the immediate, mid-term and long-term impact of minimum wage increases. Some academics argue that increasing the minimum wage can reduce income inequalities and combat poverty.Note  Others have argued that these increases might reduce employment and work hours for low-skilled workers,Note  as well as employment in automatable jobs.Note  Despite this lack of consensus, changes in the composition of minimum wage workers over time and their implications can be analyzed.

A Statistics Canada study found that recent minimum wage increases in Ontario and Alberta contributed to shifting the composition of minimum wage employees from individuals under 25 years of age towards older workers.Note  Those types of changes have potential equity and social welfare implications. For example, following a minimum wage increase, employees with years of experience who were making above the minimum wage can find themselves joining the ranks of minimum wage workers, which can mean earning as much as an employee with no experience.

This report looks at the evolution of minimum wage prevalence over the last 20 years, using annual estimates from the Labour Force Survey (LFS). It examines changes in the profile of minimum wage employees, first through a series of gradual minimum wage increases observed from 1998 to 2017, followed by notable increases in 2018. It then looks at changes in the average minimum wage in Canada compared with the average hourly wages for all employees.

Highlights

  • Between 1998 and 2018, the proportion of employees earning minimum wageNote grew from 5.2% to 10.4%, with most of that growth occurring between 2017 and 2018. This coincided with notable minimum wage increases in Ontario, Alberta and British Columbia.
  • In 1998, the percentage of minimum wage workers among employees living in urban areas was lower than that of employees living in rural areas. By 2018, the proportion of urban employees earning minimum wage had surpassed that of rural employees.
  • A little less than one in four minimum wage employees had a postsecondary diploma or above in 1998 and that proportion grew to a little more than one in three minimum wage workers by 2018.
  • In the early 2000s, retail trade surpassed accommodation and food services as the largest employment sector for minimum wage workers and has remained the largest since.
  • The proportion of employees earning minimum wage increased at a faster pace among large firms compared with medium and small firms between 1998 and 2018.
  • Over the last 20 years, the average nominal minimum wage grew by 3.5% annually while the average nominal hourly wage for all employees increased by 2.7% annually.

Chosen excerpts by Job Market Monitor. Read the whole story at Maximum insights on minimum wage workers: 20 years of data

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