Is lower job quality causing Canadians’ incomes to drop?

Is lower job quality causing Canadians’ incomes to drop?

Is lower job quality causing Canadians’ incomes to drop? A steady decline in job quality over the past 20 years has left Canadians less able to weather economic downturns than before, according to a new study by CIBC Capital Markets.

“The share of low-paying jobs in Canada has been on the rise in the past two decades and might provide some insights on the ability of workers, in aggregate, to absorb future economic shocks,” said CIC Capital Markets Deputy Chief Economist and report author Benjamin Tal.

Focusing solely on unpublished wage data from Statistics Canada, Tal has found the percentage of Canadians making less than the average wage each year has inched up from around 58% to nearly 61% over the past two decades. The current mean wage is around $25 per hour.

“Lower quality employment might help explain the sluggish growth in personal income,” Tal said. Even focusing on young Canadians aged 25 to 54 years old, a similar trend was found: 53% of young Canadians make less than the average wage, compared to 50% 20 years ago.

Looking at wage growth by percentile, Tal found more evidence of an increasing income gap. “[T]hose at the lowest end of the wage spectrum are seeing relatively healthy wage gains, but the group closer to the middle of the wage spectrum has seen sub-par growth.”

Slicing the data into part-time, full-time, and self-employed modes of employment, the share of Canadians working part-time showed an “unmistakeable jump” from 18% to 20% during the 2009 recession. The number currently stands at 19.5%, with most of the increase occurring among workers above the age of 55.

“[T]he fact that half of the increase in part-timers among that age group accrued during the recession suggests that beyond pure demographics, there is an element of fragility here,” Tal said.

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