Working For Low Wages

Earning an adequate wage is perhaps the most important factor in ensuring citizens enjoy a standard of living that is free of poverty. But, despite all the hype surrounding the ‘new economy,’ over two million Canadian workers over the age of 15 are employed in jobs that pay less than $10 an hour. It is commonly assumed that low-wage workers tend to be teenagers working for ‘pocket money,’ high school dropouts, or supplementary family earners. While this is to some extent true, a large number of low-wage workers do not fit those moulds, something which becomes evident when young people under the age of 25 are taken out of the picture. Moreover, a recent study by the Canadian Imperial Bank of Commerce found that three quarters of all new full time jobs created in Canada over the past year paid less than the average wage, primarily in the retail and other service sectors. 

Almost One in Four Canadian Workers Earns Less Than $10 an Hour

As the chart illustrates, almost one in four workers aged 15 and over earns less than $10 an hour in their main job. The chart also indicates that women are much more likely than men to work for low wages, with three in 10 Canadian women 15 years and older working in a job that pays less than $10 an hour. Many low-wage workers are young people under the age of 25. Indeed, close to two-thirds of 15 – 24 year olds work for less than $10 per hour and this group accounts for 47 percent of all low wage workers over the age of 15 (data not shown).

Many workers between the ages of 15 and 24 are students for whom working for low wages will be temporary. As a consequence, we focus the rest of our analysis on adult workers aged 25 and older who earn low wages. By the age of 25, it is reasonable to assume that the vast majority of such individuals are economically independent of their parents, and that working in a low paying job puts them at high risk of living in poverty, despite being gainfully employed. 

At $10 an hour, a worker would earn roughly $21,000 in a year, assuming they are employed year round and work 40 hour weeks. This may actually overestimate yearly earnings because many low-wage workers neither work year round nor work 40 hour weeks. A full-time job at $10 an hour would keep them slightly above Statistic Canada’s Low-Income Cut-Off (LICO) which was pegged at $18,371 in 2000 for an unattached individual living in one of Canada’s 9 largest metropolitan areas with a population over half a million (with the possible exception of Toronto and Vancouver, the most expensive cities). For families, a $10 an hour job, even if full time and full year, would not suffice to keep them above the low-income cut-off mark.

By Employment Type

Low-wage jobs are found especially among those employed on a part-time (less than 30 hours / week) or temporary basis. Roughly one in three casual, seasonal and part-time adult workers earns less than $10 an hour. Conversely, about one in eight full-time or permanent employees work for less than $10 an hour. Part-timers and temps therefore face a double disadvantage – they work fewer hours or have insecure jobs, and are more frequently paid a low hourly wage. 

The chart also indicates that a larger proportion of multiple job holders earn low wages in their main job than those who hold just one job. This suggests that many low-wage workers seek out one or more additional jobs in order to supplement the low take-home pay earned in their main job.

By Province

Incidence of Low Wage Work Among Adults* Most Common in Maritimes

As the chart indicates, the incidence of low-wage work is highest in the Atlantic Provinces. Indeed, a quarter or more of adult workers in Newfoundland, P.E.I., New Brunswick and Nova Scotia earn less than $10 an hour in their main job. Ontario and B.C. on the other hand have the lowest proportions of their adult labour force working for low wages. Manitoba and Saskatchewan are in the middle of the pack with roughly one in five paid workers being employed in a low-wage job, slightly above the national average of 15 percent for workers aged 25 or more. 

In terms of overall numbers, the two provinces with the largest populations – Ontario and Quebec – account for over half of the two million or so low-wage workers in Canada. Interestingly, British Columbia which has a population roughly one third greater than that of Alberta, actually has fewer workers earning less than $10 an hour. Although this difference is attributable to a variety of factors, such as the makeup of provincial industries, the significantly higher B.C. minimum wage, which was $1.25 higher for most of the year 2000 than Alberta’s ($5.90 versus $7.15), may also be an important consideration. A higher minimum wage may, for example, place upwards pressure on wages generally by setting a relatively high wage floor. Also, it could be expected that workers beginning at minimum wage in BC will reach the $10 an hour mark sooner than workers where the minimum wage is set below that level.

By Education

Incidence of Low Wage Work Among Adults*
Highest Among Those With Least Education

We know that education is a key factor associated with securing a decent-paying job. Insofar as protecting oneself from low earnings is concerned, the evidence indicates that this is indeed the case. In fact, there is a direct relationship between educational attainment and the likelihood of being employed in a low-wage job, as is illustrated in the chart. Close to 30 percent of high school drop-outs work in jobs that pay poorly. While the incidence of low-wage work is much lower among those with high school completion (but no further), it nevertheless remains at 18 percent. Post-secondary graduates are much better off overall, with university graduates in particular showing a low incidence of low-wage workers at 6 percent, or one in every 17 degree holders.

The chart outlines the 10 occupations where low pay is most prevalent. As indicated, low-paying jobs are highly concentrated among a few occupations. More than one in every two workers employed in sales, working as cashiers, and restaurant workers earn less than $10 an hour, though many food and beverage servers also earn tips. About one third of workers in child and home care occupations, 30 percent of those in manufacturing and utilities, and more than one in four sales and service supervisors earn less than $10 per hour. 

In terms of industries, low wage jobs are found in all major sectors – manufacturing, primary industries, and services. Over half of the jobs in clothing manufacture and leather and in accommodation and food services pay less than $10 per hour. The incidence of low wages is also high in agriculture, retail trade, and management support and administration.

Additional Charts and Information