Study: Low wage and low income

1993 to 2004

Fewer Canadians slipped into low income in 2004, while more were able to climb out, according to a new study that analyzes the economic well-being of Canadians exposed to low income and low wages.

Using new income data for 2004, the study showed that only 3.3% of Canadians who were not living below Statistics Canada's low-income cutoff (LICO) in 2003 had slipped into low income in 2004.

This was a much lower rate than a decade earlier. About 5.5% of Canadians who were not in low income in 1993 fell into it by 1994. By 1998, the proportion of those entering low income dropped below 4%.

At the same time, one-third (34%) of individuals living below the LICO threshold in 2003 had climbed out of low income by 2004. A decade earlier in 1994, the proportion of individuals who had exited low income was only about 28%.

Previous Statistics Canada research has shown that individuals and families can fall into low income with the loss of a job, birth of a child, a family breakdown or many other factors. They exit low income for many reasons as well. One factor may be the substantial increase in earnings from employment during the past decade.

In 2004, about 3.5 million people were living in low income, down by about 1.1 million from the peak in 1996.

The study reinforced previous research showing that low income is not a permanent state of existence for most Canadians who face it. About 20% of the population experienced low income for at least one year between 1999 and 2004.

However, only 2% lived in low income throughout this period, whereas almost 4% lived continuously in low income between 1993 and 1998.

One in seven full-time employees hold low wage jobs

Just over 1.3 million full-time employees aged 16 to 64 held low wage jobs in 2004, representing one in every seven, or about 14% of all full-time employees.

This rate in 2004 represented only a slight change from the level of 16% in 1993. It peaked at just over 20% in 1996.

The decline in low wage workers between 1993 and 2004 was relatively small, but statistically significant. (For the purpose of the study, low wage workers were defined as those whose composite wage rate from all jobs was lower than $10 per hour in constant 2001 dollars.)

Throughout this decade-long period, the proportion of women in low wage jobs remained roughly double that of men. Women are more likely to be in low paid occupations such as clerical, sales and service jobs.

In addition, the proportion of youngest workers aged 16 to 24 in low wage jobs was consistently three to four times that of older workers aged 25 to 64. This reflects the tendency of the labour market to reward experience and job tenure. Low wage work was also far more prevalent for those with lower levels of education.

Low wage work on the decline in Alberta and Saskatchewan

Only two provinces, Alberta and Saskatchewan, showed significant declines in the proportion of low wage workers between 1993 and 2004.

In 1993, about 19% of Alberta's full-time employees aged 16 to 64 held low wage jobs; by 2004, this had declined to only 14%. In Saskatchewan, this rate fell from just under 25% to only 18%.

Alberta's rate was only about one-half the equivalent rates in both New Brunswick (28%) and Nova Scotia (24%) in 2004.

Not all low wage workers live in a low income family

Not all workers with a low wage live in a "low income family." Low wage workers consist of two distinct groups. Just over half are not their family's major income earner, while just under half are.

Those who were not their family's major income earner were not, as a result, likely to live in a low income family, that is, one below the low-income cutoff. In 2004, only 3.5% of low wage workers who were not the family's major income earner lived in a low income family.

In contrast, the group of low wage workers who were their family's major income earners was seven times more likely to experience low income. Almost 25% of them lived in a low income family in 2004. This group includes people living on their own who by definition are the sole earner. Also included are families with just one earner.

These major income earners in low wage jobs were also more prone than other workers to experience low income repeatedly.

For example, among major income earners in low wage jobs in 1999, almost 19% experienced low income for at least two years, not necessarily consecutive, between 1999 and 2004. This was true of less than 5% of other low wage workers and less than 2% of higher-wage workers.

Nevertheless, over 60% of major income earners who had a low wage in 1999 did not experience low income in any year between 1999 and 2004.

Among major income earners with a low wage, single people and lone parents experienced the highest rates of low income.

Definitions, data sources and methods: survey number 3889.

The publication Low Wage and Low Income (75F0002MIE2006006, free) is now available online. From the Our products and services page, under Browse our Internet publications, choose Free, then Personal finance and household finance.

For more information, or to enquire about the concepts, methods or data quality of this release, contact Client Services (1-888-297-7355; 613-951-7355; fax: 613-951-3012; income@statcan.gc.ca), Income Statistics Division.