Study: Are good jobs disappearing in Canada?

Hourly wages have been very stable over the last two decades, with little change in the proportion of workers holding either well-paid jobs or low-paid jobs. However, newly hired employees have seen their wages drop substantially relative to those of other workers, according to the new study Are Good Jobs Disappearing in Canada?

Recent media reports in the United States and in Canada have raised the possibility that new forms of outsourcing, involving service sector positions with high skill requirements, may be driving jobs offshore and contribute to the elimination of well-paid jobs in Canada.

Although this study does not directly examine the link between outsourcing and job loss, it finds little evidence that well-paid jobs have been disappearing in Canada in recent years or since the early 1980s.

In 2004, 11% of all employees aged 25 to 64 were employed in jobs that paid $30 or more per hour. This was higher than the rate of 9% observed in 1981.

However, newly hired employees (those with two years of seniority or less) have lost ground relative to their counterparts with greater seniority during that period. For instance, newly hired men aged 25 to 64 saw their median wages drop 13% between 1981 and 2004. In contrast, their counterparts with more than two years of seniority saw their wages increase 4%.

In general, newly hired men and women, both young and older, suffered a decline in their wages relative to their counterparts with greater seniority. Relative wages of new employees fell among university graduates as well as less educated workers. They dropped in manufacturing as well as in other industries.

The study also showed that newly hired employees have been increasingly employed in temporary jobs since the late 1980s. Of all private sector employees recently hired in 1989, 11% had a temporary job. In 2004, the corresponding proportion was almost twice as high at 21%.

While the percentage of Canadian workers employed in well-paid jobs has not fallen over the last two decades, the percentage of workers covered by a registered pension plan (RPP) has decreased overall.

The drop in pension coverage was not uniform across various groups of workers. RPP coverage has fallen substantially for men aged 25 and over while it has dropped slightly for women aged 25 to 34. However, coverage has risen for women aged 45 to 54.

It is not known whether the decline in the RPP coverage for men has been fully offset by an increase in coverage by group registered retirement savings plans (group RRSPs). However, this decline implies that today's male employees are less often covered by a defined-benefit plan than their counterparts were in the early 1980s. This is so since group RRSPs, contrary to most RPPs, do not guarantee workers a defined benefit at the time of their retirement.

No decline in relative importance of well-paid jobs

Median wages of Canadian workers have changed little over the last two decades. Despite the growing experience and educational attainment of the work force, median hourly wages of employees aged 25 to 64 were only 2% higher in 2004 than in 1981.

During that period, the relative importance of well-paid jobs in the Canadian labour market did not decline. Of all workers aged 25 to 64, 22% earned $25 or more per hour in 2004. In 1981, 18% did so.

While the percentage of Canadian workers holding well-paid jobs did not decline, the proportion employed in low-paid jobs did not increase. In 2004, 16% of employees aged 25 to 64 earned less than $10 per hour. In 1981, 17% received these pay rates.

New employees lost ground

While the percentage of Canadian workers holding well-paid jobs did not fall, new employees have lost ground relative to their counterparts with greater seniority.

For instance, median wages of newly hired women dropped 2% between 1981 and 2004. In contrast, those of their counterparts with more than two years of seniority rose 14%.

Except for women aged 25 to 34, wages of newly hired men and women fell behind those of other workers in all age groups.

For instance, median wages of newly hired men and women aged 45 to 64 either fell or stagnated between 1981 and 2004. In contrast, those of their counterparts with greater seniority rose between 14% and 22%.

The deterioration of wages of new employees was not limited to a particular industry either. Newly hired men employed in manufacturing saw their median wages fall 19% between 1981 and 2004, compared with a drop of 11% for those outside manufacturing.

New employees increasingly employed in temporary jobs

While the wages offered to new employees have dropped relative to those offered to other employees, the type of jobs offered to new employees has also changed.

New employees have been increasingly offered temporary jobs. Of all women newly hired in 2004, 23% held temporary jobs, over twice the rate of 11% in 1989. Among their male counterparts, 20% held temporary jobs in 2004 compared with only 12% in 1989.

New employees have also been increasingly employed in non-unionized jobs. For instance, union coverage of newly hired men fell by almost 20 percentage points, from 38% in 1981 to 19% in 2004. This is twice the drop in union density observed among other male employees. For this group, union density decreased from 48% in 1981 to 39% in 2004.

Falling pension coverage

Meanwhile, the proportion of Canadian workers covered by a RPP has fallen. In 2000, 41% of all employees (including those under 25) had a RPP, compared with 47% in 1981.

Overall, men have seen their RPP coverage drop by more than 10 percentage points over the last two decades. In 2000, 42% of all male employees had a RPP, well below the proportion of 54% in 1981.

In contrast, women experienced a small increase in RPP coverage during that period. However, this increase was not observed in all age groups. Pension coverage fell slightly among women aged 25 to 34, while rising among women aged 45 to 54.

The research paper Are Good Jobs Disappearing in Canada? (11F0019MIE2005239, free) is now available online. To access the Analytical Studies Research Paper Series, select Studies on the left side bar, under Browse periodical and series choose Free and for sale. Under Series select Analytical Studies Branch.

For further information or to enquire about the concepts, methods or data quality of this release, contact René Morissette (613-951-3608), Business and Labour Market Analysis Division.