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Monday, April 25, 2005

Study: Low-paid work and economically vulnerable families

1980 to 2004

Even though today's workers are better educated and more experienced than their counterparts were in the early 1980s, their chances of being employed in a low-wage job have changed little over the last two decades. However, most of them do not live in low-income families.

Between 1981 and 2004, the proportion of adult employees (those aged 25 to 64) who had a university degree rose from 14% to 24%. Because of aging, the adult work force has also become more experienced.

Yet the proportion of adult employees who were working in jobs paying less than $10.00 per hour (in 2001 dollars) changed little between 1981 and 2004, moving from 17% to 16% over the period.

Meanwhile, the majority of low-paid workers did not live in low-income families. Both in 1980 and in 2000, 70% of those employed full-time lived in families with income above Statistics Canada's Low-Income Cutoffs (LICO's).

These are a few of the findings from a study that summarizes some of the research recently conducted by Statistics Canada regarding low-paid work and economically vulnerable families.

While chances of living in low income have not increased overall for low-paid workers, recent immigrants and adults with low education levels have become increasingly economically vulnerable.

The reason is that their chances of both receiving low pay and living in low income-families have risen.

For instance, 6% of recent immigrants aged 35 to 54 and employed full time both received low pay and lived in low income in 1980. By 2000, this proportion had doubled to 12%.

Four groups were very likely to be in this position: individuals with no high school diploma, recent immigrants, unattached individuals (living alone or with cohabitants) and female lone-parents.

Even though they represented only 37% of all full-time workers, these groups accounted for 71% of full-time employees who were both in low-wage jobs and in a low-income family in 2000.


Note to readers

This release is based on a research paper titled "Low-paid work and economically vulnerable families over the last two decades", available today.

The study synthesizes the findings from several studies recently conducted by Statistics Canada regarding low-paid work and economically vulnerable families in Canada. In this study, low-paid workers are defined as those holding jobs paying less than $10.00 per hour (in 2001 dollars) or those full-time employees earning less than $375 per week (in 2000 dollars).

For the reference year 1980, the study defines recent immigrants as those who arrived in Canada between 1975 and 1979. Similarly, for the reference year 2000, recent immigrants are defined as those who arrived in Canada between 1995 and 1999.


Little change in the share of workers in low-wage jobs

Between 1981 and 2004, the proportion of workers aged 25 to 64 holding jobs paying less than $8.00 per hour fell from 9% to 7%.

Meanwhile, the share of workers employed in jobs paying between $8.00 and $9.99 rose marginally from 8% to 9%. As a result, the share of adult workers employed in jobs paying less than $10.00 per hour changed little.

The share of adult workers employed in low-paid jobs did not drop overall in spite of the fact that the percentage of adult employees with a university degree increased during that period.

This means that some workers with a given level of education ended up having lower wages in the late 1990s than their counterparts had in the early 1980s.

For instance, young Canadian-born males (those aged 25 to 34) with a high school education or less saw their real wages drop substantially over the last two decades. Likewise, older recent immigrant men of all education levels also suffered a decline in wages over the last two decades.

Most low-paid workers do not live in low-income families

In 2000, about 30% of full-time employees (including those under 25) earning less than $375 per week (in 2000 dollars) lived in families whose income fell below Statistics Canada's LICO's. This proportion remained unchanged from 1980.

The stability in the incidence of low income among low-paid workers masks two offsetting trends.

The growing number of unattached individuals and single parents (who cannot rely on a second earner for increasing family income) has tended to increase the proportion of low-paid workers in low-income families by 2 to 3 percentage points.

However, this rise was offset by the growing number of dual-earner families and the growing labour market experience of low-paid workers, both of which tended to increase family income among low-paid employees.

Economic vulnerability increases for some families

Overall, only 5% of all full-time employees both received low pay and lived in low income in 2000, which was the same proportion as in 1980.

However, some families have become increasingly economically vulnerable.

For instance, the share of recent immigrant full-time workers who both have low pay and live in low income rose from 9% in 1980 to 12% in 2000.

In fact, recent immigrants were 2.5 times more likely to live in low income than their Canadian-born counterparts in 2000. This is much higher than the corresponding ratio of 1.4 observed in 1980.

Families where both partners have a high school education or less also experienced increasing economic vulnerability.

Among young Canadian-born couples (those with males aged 25 to 34) where both partners have low education levels, male earnings fell between 15% and 28% during the 1980 to 2000 period. Despite growing spousal earnings, employment income in these families fell by between 6% and 15%.

Economic vulnerability is highly concentrated

While 5% of all full-time employees both received low pay and lived in low income in 2000, unattached individuals (living alone or with other cohabitants), female lone parents, individuals with a high school education or less and recent immigrants were much more likely to be in this position than other workers.

For example, 25% of all unattached women under 40 who were employed full-time both received low pay and lived in low income in 2000. The corresponding number for their male counterparts was 17%.

Even though they represented only 37% of all full-time workers, the four groups mentioned earlier accounted for 71% of full-time employees who were in low-wage jobs and in a low-income family in 2000.

Chances of escaping low earnings did not improve

For some workers, low-wage jobs may represent a stepping stone to better paying jobs as they acquire labour market experience and participate in job search. This is especially true for highly educated workers, who generally escape low earnings faster than their counterparts with lower education levels.

Since low-paid workers have increased their educational attainment over the past two decades, their chances of escaping low earnings should have improved over time.

This did not happen. For men aged 30 or more, chances of moving out of low earnings were not markedly higher during the 1996 to 2000 period than during the 1985 to 1989 period, two periods with similar labour market conditions.

For instance, roughly 45% of male low earners aged 30 to 39 moved out of low earnings between 1985 and 1989. For the 1996 to 2000 period, the proportion did not change appreciably.

Female earners also saw little change in the likelihood of moving up from low earnings over the period. Only women aged 25 to 29 enjoyed a substantial increase in upward mobility. Their chances of moving out of low earnings rose by about 6 percentage points between 1985 to 1989 and 1996 to 2000.

The research paper Low-Paid Work and Economically Vulnerable Families Over the Last Two Decades (11F0019MIE2005248, free) is now available online. A short version of this study entitled Summary of: Low-paid Work and Economically Vulnerable Families Over the Last Two Decades (11F0019MIE2005249, free) is also available. From our home page select Studies, then under Browse periodical and series choose Free and for sale. Under Series select Analytical Studies Branch.

Related studies from the Business and Labour Market Analysis Division can be found at Update on Analytical Studies on our Web site (11-015-XIE, free).

For further information or to enquire about the concepts, methods or data quality of this release, contact René Morissette (613-951-3608) or Garnett Picot (613-951-8214), Business and Labour Market Analysis Division.



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