Low-paid workers: How many live in low-income families?
Low-wage jobs are a perennial topic of interest for labour market and social analysts. Almost two million Canadians, aged 20 or older, work for less than $10 an hour, with about one-third being the only wage earner in the family (Maxwell 2002).
Simply being employed is no longer enough to exempt a person from economic and social risks. Low-wage workers are less likely to have access to non-wage benefits such as pension plans, supplemental health insurance, and dental plans. Furthermore, low-wage jobs are more likely to be temporary or part-time and less likely to be unionized. Jobs with no certainty of continuing, with less input into working conditions, less regulatory protection, and low wages have been termed 'precarious' (Rodgers 1989).
The primary question, however, is whether low wages represent a serious impediment to an individual's quality of life. Changes in economic family structure over the years have meant that fewer families have only one breadwinner, and as women's employment rate has increased, more families have multiple and secondary earners. On the other hand, the number of lone-parent families has increased, and a single minimum-wage job in these circumstances may not be economically sufficient.1 Using the census, this article explores which groups of individuals were at risk of being low-wage earners in 2000, what proportion of them lived in low-income families, and how the situation changed between 1980 and 2000.
Those more likely to have low weekly earnings
In 2000, about 1.7 million Canadians were in low-paid, full-time jobs, representing 16% of all full-time employees—only a slight (1%) increase from twodecades earlier (see Distribution of wage earners in Canada). Although the overall proportion did not change much, some groups saw their propensity to have low earnings increase substantially (Table 1).
Women employees were almost twice as likely as men to have low weekly earnings (Chart A).2 One explanation may be that women are more likely to be in low-paying occupations (Drolet 2001a, 2001b). Traditional occupations for women, such as clerical, sales and service, yield lower earnings on average than others (Statistics Canada 2003). Women also average fewer years of experience since they are more likely to take time off for family-related reasons. However, with the narrowing of the earnings gap between men and women (Drolet 2001a), the proportion of low-paid women decreased from 26% to 22% between 1980 and 2000.
On the other hand, the percentage of low-paid men increased over this time from 9% to 12%—largely because of a drop in the real wages of young men during the 1980s in most industries and occupations (Morissette 1998). Another factor is the increase in men entering jobs that have traditionally been dominated by women—teaching, service, clerical and some manufacturing occupations (Hughes 1990). Although men in these occupations still earn more than women, they earn less than the average male employee.3
The less educated
Individuals with less than high school education had a higher incidence of low pay than those with higher levels of educational attainment (Chart B).4 This pattern held for both men and women. About 1 in 4 employees with less than high school education had low weekly earnings in 2000, unchanged between 1980 and 2000, although the probability of being a low-wage earner increased for men in each education category.
Women were more likely than men to be in low-paid jobs, even with the same educational attainment. In 2000, the proportion of women with less than high school education who were low-paid workers was twice that of men (39% and 19% respectively). The gap decreased with level of education. While men with less than high school were more likely to be low-paid in 2000 than 20 years earlier, the percentage for women changed very little.
The probability of having low weekly earnings in 2000 was highest among young employees (aged 15 to 24) at 45% (Chart C). The rate declined sharply until age 55, after which it increased slightly. This is to be expected since the labour market tends to reward both experience and job tenure. Moreover, many young workers are concentrated in relatively low-wage industries such as consumer services. The same pattern was evident in 1980, although the proportion of low-wage earners was lower (31% for young workers in 1980 compared with 45% in 2000). The rise in women's employment rate may have affected young workers. Increased competition has meant that jobs they once held (for example, in services or sales) are being filled by women, and more youths than before may find themselves with low earnings (Sunter 1994). Once again, in all age groups, higher proportions of women than men were low-paid workers. However, while the risk of having low weekly earnings increased between 1980 and 2000 for men in all age groups, it decreased for women who were 35 or older.
In 2000, recent and mid-term immigrants were more at risk of having low weekly earnings than immigrants who had been in Canada for more than 15 years or those who were Canadian-born. This may be related to the adjustment phase that newcomers experience. The likelihood of having low weekly earnings increased between 1980 and 2000 for immigrants, perhaps because of a shift in national origin from Europe and the United States to less developed countries (Borjas 1991; Picot 2004). The latter immigrants receive less credit for foreign experience and may face greater difficulties having their skills or credentials recognized (Picot and Hou 2003). While the risk of having low weekly earnings rose for male immigrants5 and for mid-term female immigrants, it fell for long-term female immigrants.
Visible minorities born in Canada were similar to their non-visible-minority counterparts—a difference of only one percentage point in the proportion with low weekly earnings.6 A greater gap was found between visible-minority and non-visible-minority immigrants (Hum and Simpson 1998). The greatest difference was seen among recent immigrants (31% for visible minorities and 19% for non-visible minorities) and decreased with time spent in Canada.7
Recent and mid-term visible-minority immigrants saw their risk of low weekly earnings rise between 1980 and 2000.8 The likelihood rose for recent and mid-term, non-visible-minority immigrant men but fell for women.
Individuals with work limitations
Individuals limited at work because of a physical, mental or health condition were more likely to have low weekly earnings than those without limitations. Whether their chances of having low weekly earnings fell between 1980 and 2000 cannot be assessed since the census question regarding work limitation changed.9
Individuals living with relatives
Individuals living with relatives but not part of a census family have a high risk of low weekly earnings (Chart D). The incidence of low-paid workers among this group increased—from 23% in 1980 to 28% in 2000.10 Whether these arrangements are born out of need or familial responsibility cannot be assessed with these data.
Almost 1 in 4 lone mothers working as an employee in 2000 had low weekly earnings (23%). Because they require flexible hours for taking children to school or child-care centres, lone mothers may find their job prospects restricted. They also tend to choose occupations and industries that are easy to enter and exit, such as consumer services where wages are generally lower.11 Also, given the strain of raising children on their own, lone mothers are often less healthy than mothers with spouses (Pérez and Beaudet 1999). This could also deter them from working in high-pay, stressful environments.
Unattached individuals were also vulnerable to having low weekly earnings—those under 40 more so than those older (25% and 17% respectively). While unattached women were more likely to receive low pay than their male counterparts, the proportion fell between 1980 and 2000, especially among women 40 or older. Among unattached men, the risk of low weekly earnings rose for those under 40 while falling for those older.
Low-paid workers living in low-income families
Those most financially constrained by low-paid jobs are living in low-income families. Of the 1.7 million full-time workers receiving low weekly earnings, 30% lived in families with low income in 2000—unchanged from 1980 (Table 2).12
Unattached or living alone
For most groups of low-paid workers, the risk of being in low income is not much greater than for other groups. However, some are more vulnerable than others. Over three-quarters of unattached individuals and over two-thirds of those living alone with low weekly earnings in 2000 were living in low-income households (Chart E). In the case of these two groups, individual income is equivalent to family income, and not having live-in economic partners makes them financially insecure. Nevertheless, their risk of living in low income decreased between 1980 and 2000, the proportion falling by 3 percentage points for individuals living alone and 5 points for unattached individuals. In particular, low-paid unattached women aged 40 or older saw their low-income propensity decrease by 10 percentage points, from 79% to 69%.
Lone parents with low weekly earnings are also at risk of being in low income. In 2000, 56% of low-paid lone mothers and 53% of lone fathers also had low family income. These individuals were predominately sole earners. In contrast, only 14% of low-paid married women had low family income. Lone mothers, however, were less likely to be in this situation in 2000 than in 1980.13
While the incidence of living in low income rose slightly among low-paid women, it decreased three percentage points among men—from 39% to 36%. Although female full-time employees have a higher risk than their male counterparts of making low weekly earnings, low-paid men are more at risk of being in a low-income family. In 2000, the proportion of men with low weekly earnings in low-income families (36%) exceeded the rate for women (25%). In particular, almost half of middle-aged men (age 35 to 44) with low-paid jobs lived in low-income families, compared with 26% of their female counterparts. This suggests that, in this age group, more low-paid women than men live with family members (for example, a spouse) who can compensate for their low earnings.
The proportion of visible-minority recent immigrants who were low-paid and living in low income did not change significantly between 1980 and 2000. However, this was not the case for other recent immigrants—for men the risk jumped from 46% to 60% and for women from 21% to 32%.14 In contrast, it decreased among their Canadian-born counterparts. More than half of recent immigrant men in low-paid jobs lived in low-income families in 2000—53% of visible minorities and 60% of others.
Employees working full time for low pay and living in a low-income family
In 2000, 5% of all full-time employees had low earnings and lived in low-income families (Table 3). However, this average again masks substantial differences across groups. For instance, more than 22% of unattached women employed full time had low weekly earnings and lived in low income, compared with 16% of unattached men. The proportion for lone mothers was 13% compared with less than half that for lone fathers. Recent and mid-term immigrants, particularly visible minorities, were also more likely to live in low-income families and to have low-paid jobs.
The overall proportion of low-paid employees living in low-income families was virtually static between 1980 and 2000. However, this does not mean that the individuals remained the same. In fact, younger workers, recent and mid-term immigrants (especially visible-minority immigrant men), and unattached men under 40 saw their chances of having low pay and low family income rise. In contrast, low-paid unattached women saw theirs decrease.
Despite their unchanged proportion, low-paid employees saw their average weekly earnings fall between 1980 and 2000. In fact, while average weekly earnings of full-time employees rose by 11% from $785 in 1980 to $868 in 2000 (Table 4), those of low-paid workers dropped from $251 to $231 (-8%). For low-paid workers in low-income families, they dropped even more—from $211 to $175 (-17%, Table 5). Thus, despite no increase in the incidence of low-paid workers in low-income families, these individuals seemed to be worse off than before.
Average weekly earnings fell among most low-paid employees. Some were affected more than others. Individuals with less than high school education saw theirs fall by 9%. Low-paid immigrant women experienced a larger drop than immigrant men—even though the likelihood of being a low-paid worker increased more for these men. And visible-minority women saw a greater decrease than their non-visible minority counterparts. Although single mothers saw theirs fall by the same proportion as married women (8%), the earnings of single fathers dropped almost 3 percentage points more than married men.
Even though the average weekly earnings of low-paid workers fell by 8%, their annual earnings rose by 6%, suggesting that they were working more weeks (Table 6).15 A decline of over $1,500 in average family earnings was dampened by an increase of almost $1,500 in other income and transfers. Thus, average economic family income of low-paid workers did not change significantly from 1980 to 2000, leading to no change in the 30% proportion of low-paid workers living in low-income families.16
The proportion of low-paid workers among full-time employees has changed little over the last two decades (15% in 1980 and 16% in 2000), and the proportion of low-paid workers living in low-income families has remained at 30%. As a result, the percentage of full-time employees who were both receiving low pay and living in low income also remained unchanged at 5%.
Individuals most likely to have low weekly earnings were women, those with less than high school education, young adults, recent and mid-term immigrants in visible-minority groups, individuals living with relatives, lone mothers, unattached individuals under 40, and persons with a work limitation.
Those most at risk of receiving low pay and living in low-income families were young adults, recent and mid-term immigrants in visible-minority groups, lone mothers, and unattached individuals.
Between 1980 and 2000, average weekly earnings of low-paid workers decreased by 8%, while those of all full-time employees increased by 11%. However, the proportion of low-paid workers living in low-income families remained just under one-third.
Data source and definitions
The study used the 1981 to 2001 Censuses. Deriving hourly wages from census data is difficult because weekly hours of work refer to the week previous to the census (usually in May or June) while annual earnings and weeks worked refer to the previous year.
To overcome this difficulty, only individuals who worked mainly full time in the year prior to the census were selected. Their annual earnings were divided by the number of weeks they worked to calculate weekly earnings. Low pay was defined as less than $375 weekly in 2000 dollars (using province-specific deflators). Assuming 37.5 hours per week, this definition amounts to examining individuals whose hourly earnings were less than $10 per hour, the cut-off used in some previous studies.
The sample consisted of individuals aged 15 to 64, who were not full-time students, worked mainly full time, and received a wage or salary but no income from self-employment in the year prior to the census.
Recent immigrants arrived in Canada during the five years prior to the census reference year. Mid-term immigrants arrived 6 to 15 years before, and long-term immigrants more than 15 years before. For example, for the reference year 2000, recent immigrants arrived from 1995 to 1999, mid-term immigrants from 1985 to 1994, and long-term immigrants prior to 1985.
Unattached individuals live with others but are not related to them and do not share income with them (for example, boarders or roommates).
Low-income cut-offs (LICOs) are established using the Survey of Household Spending (or its predecessor, the Family Expenditure Survey). They are the income level at which a family spends 20 percentage points more than the average of its before-tax, after-transfer income on basic necessities. LICOs vary by family and community size. For example, in 2000, the LICO for a family of two living in a community of 500,000 or more was $22,964. For a family of seven or more in the same region, the LICO was $46,793.
- In 1980, lone parents accounted for 3.6% of all full-time employees; in 2000, the proportion was 5.7%.
- All comparisons in this article are statistically significant at the 5% level.
- Changing family structure and responsibilities since 1980 may also have contributed to the increased proportion of men in low-paid jobs. Given their growing interest and involvement in child care, more men may be choosing jobs with more flexibility in hours over ones with better pay but requiring more hours (Marshall 1998). This, however, may be more likely among men with higher earnings who can afford a slight pay cut. In addition, since women are participating more in the labour force and are attaining higher-paying jobs, men may no longer be the major family earner.
- In the late 1990s, the average master's or PhD graduate made twice the wages of people with less than high school education (Statistics Canada 1998).
- This is consistent with other research indicating that the entry earnings of recent immigrant cohorts deteriorated in the last two decades (Frenette and Morissette 2003; Aydemir and Skuterud 2004).
- However, this masks offsetting effects between men and women. Canadian-born visible minority men are more likely to receive low pay than Canadian-born, non-visible minority men. In contrast, Canadian-born visible minority women are less likely to receive low pay than Canadian-born non-visible minority women.
- This agrees with other recent studies showing that visible-minority immigrants are more vulnerable to low earnings than other immigrants (Palameta 2004).
- The increase in the incidence of low-paid workers among recent female immigrants who are members of a visible minority group is not significant at the 5% level.
- The wording of the question was changed in the 2001 Census of Population from "Is this person limited in the kind or amount of activity that he/she can do because of a long-term physical condition, mental condition or health problem—a) at home, b) at school or at work, c) in other activities" to "Does a physical condition or mental condition or health problem reduce the amount or the kind of activity this person can do—a) at home, b) at work or at school, c) in other activities."
- The majority of low-paid workers in this group are Canadian-born and not in a visible-minority group.
- According to the 2001 Census, 44% of lone mothers who are employees worked in services (administrative and support; waste management and remediation; education; health care and social assistance; arts, entertainment and recreation; accommodation and food; and other).
- Family income is defined as the pre-tax, post-transfer income of all family members. An unattached individual is treated as an economic family.
- The decrease in risk for low-paid lone mothers and unattached women aged 40 and over was due to an increase in government transfers and a rise in annual earnings respectively.
- The main reason for this was the substantial decline in spousal and other family members' earnings.
- In 1980, full-time employees worked an average of 44 weeks, compared with 47 in 2000.
- Little change occurred in the average size-adjusted family income of low-paid workers in low-income families, suggesting that the unchanging proportion of low-paid workers in low income did not mask any worsening of their economic conditions.
- Aydemir, Abdurrahman Bekir and Mikal Skuterud. 2004. Explaining the deteriorating entry earnings of Canada's immigrant cohorts: 1966-2000. Analytical Studies Branch Research Paper Series no. 225. Catalogue no. 11F0019MIE. Ottawa: Statistics Canada.
- Borjas, George J. 1991. "Immigration and self-selection." In Immigration, Trade and the Labour Market, edited by John M. Abowd and Richard B. Freeman. Chicago: The University of Chicago Press.
- Drolet, Marie. 2001a. "The male-female wage gap." Perspectives on Labour and Income (Statistics Canada catalogue no. 75-001-XIE) 2, no. 12. December 2001 online edition.
- ---. 2001b. The persistent gap: New evidence on the Canadian gender wage gap. Analytical Studies Branch Research Paper Series no. 157. Catalogue no. 11F0019MIE. Ottawa: Statistics Canada.
- Frenette, Marc and René Morissette. 2003. Will they ever converge? Earnings of immigrant and Canadian-born workers over the last two decades. Analytical Studies Branch Research Paper Series no. 215. Catalogue no. 11F0019MIE. Ottawa: Statistics Canada.
- Hughes, Karen D. 1990. "Trading places: men and women in non-traditional occupations, 1971-1986." Perspectives on Labour and Income (Statistics Canada catalogue no. 75-001-XPE) 2, no. 2 (Summer): 58-68.
- Hum, Derek and Wayne Simpson. 1998. Wage opportunities for visible minorities in Canada. Income and Labour Dynamics Working Paper Series. Catalogue no. 98-17. Ottawa: Statistics Canada.
Marshall, Katherine. 1998. "Stay-at-home dads." Perspectives on Labour and Income (Statistics Canada catalogue no. 75-001-XPE) 10, no. 1 (Spring): 9-15.
- Maxwell, Judith. 2002. Smart social policy - "Making work pay." Research paper, Canadian Policy Research Networks Inc. Ottawa.
- Morissette, René. 1998. "The declining labour market status of young men." In Labour markets, social institutions, and the future of Canada's children, edited by Miles Corak. Chapter 3: 31-50. Catalogue no. 89-553-XIB. Ottawa: Statistics Canada.
- Palameta, Boris. 2004. "Low income among immigrants and visible minorities." Perspectives on Labour and Income (Statistics Canada, catalogue no. 75-001-XIE) 5, no. 4. April 2004 online edition.
- Pérez Claudio and Marie P. Beaudet. 1999. "The health of lone mothers." Health Reports (Statistics Canada, catalogue no. 82-003-XIE) 11, no. 2 (Autumn): 21-32.
- Picot, Garnett. 2004. The deteriorating economic welfare of immigrants and possible causes. Analytical Studies Branch Research Paper Series no. 222. Catalogue no. 11F0019MIE. Ottawa: Statistics Canada.
- Picot, Garnett and Feng Hou. 2003. The rise in low-income rates among immigrants in Canada. Analytical Studies Branch Research Paper Series no. 198. Catalogue no. 11F0019MIE. Ottawa: Statistics Canada.
- Rodgers, Gerry. 1989. "Precarious employment in Western Europe: The state of the debate." In Precarious jobs in labour market regulation: The growth of atypical employment in Western Europe, edited by Gerry and Janine Rodgers. Geneva: International Institute for Labour Studies.
- Statistics Canada. 1998. "The determinants of earnings." Labour force update (Statistics Canada, catalogue no. 71-005-XPB) 2, no. 3 (Summer): 15-18.
- --- 2003. Earnings of Canadians: Making a living in the new economy. 2001 Census: analysis series. Catalogue no. 96F0030XIE2001013. Ottawa.
- Sunter, Deborah. 1994. "Youths—waiting it out." Perspectives on Labour and Income (Statistics Canada, catalogue no. 75-001-XPE) 6, no. 1 (Spring): 31-36.
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Lucy Chung is with the Business and Labour Market Analysis Division. She can be reached at 951-1903 or email@example.com.
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