Canadian Inequality Widening As More Land In Low-Wage Work: CIBC

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Canada hasn’t yet turned into a nation of “hamburger flippers,” but a new study from CIBC Economics says the country has seen “a slow but steady deterioration” in job quality over the past two decades that is widening the income gap.

The report comes in the wake of data showing that about 90 per cent of the new jobs created in Canada over the past year were part-time positions.

store folding clothes
An ever-larger share of Canadians are working low-wage jobs, CIBC Economics says in a new report. (Photo: Creatas Images via Getty)

Some of that part-time trend can be accounted for by aging Baby Boomers staying in the workforce to supplement their income, but not all of it, meaning “there is an element of fragility here,” CIBC deputy chief economist Benjamin Tal wrote.

But the larger concern may be that an ever-larger share of Canadians are finding work in low-paid jobs, while a smaller share of workers are finding work with above-average wages.

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wage gap charts
The chart on the left shows the rising share of below-average income jobs, while the right chart shows that wage growth has been weakest among middle-income earners. (Chart: CIBC Economics)

Tal found that the share of prime working-age Canadians (aged 25 to 54) who earn below the national average has been rising steadily since the start of the century, from around 50 per cent in 2000 to 53 per cent in 2015.

“That trend is consistent with a widening wage gap symptomatic of deteriorating labour market quality,” Tal wrote.

This has impacted middle earners the most. While the top 10 per cent of earners have seen the largest wage growth since 1997, it was those in the middle income deciles -- not those at the low end -- who saw the slowest wage growth in that time.

jobs with most vacancies
Statistics Canada data from earlier this year showed that the most in-demand jobs in Canada are largely low-paid.

People at the low end of the income scale saw faster growth largely due to changes in the minimum wage, the CIBC report said.

And while Tal says this isn’t a sign that the country is about to become a nation composed mostly of low-wage workers, it does mean “the distribution of employment in Canada is not as favourable as it used to be."

The federal Liberal government recently waded into the job-quality debate when Finance Minister Bill Morneau argued that precarious work is becoming the norm, and Canadians should get used to "job churn."

Youth activists at a labour forum turned their back on Prime Minister Justin Trudeau during a speech in which Trudeau reiterated Morneau's argument.

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