Data sources, methods and definitions

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Data sources

This article is based on the Survey of Employment, Payrolls and Hours (SEPH) and the Labour Force Survey (LFS). Residents from the Northwest Territories, Yukon and Nunavut have been excluded because these regions are not included in these surveys for the entire study period.

On a monthly basis, the SEPH provides information about earnings, number of jobs (i.e. occupied positions), vacant positions and hours worked, by detailed industry, at the national, provincial and territorial levels. Monthly survey estimates are produced by a combination of a census of payroll deductions provided by the Canada Revenue Agency and the Business Payrolls Survey (BPS), which collects data from a sample of 15,000 businesses.

The Labour Force Survey (LFS) is a monthly household survey of about 54,000 households across Canada. Demographic and labour force information is obtained for all household members 15 years of age and over. Excluded are persons living in institutions, on Indian reserves or in the territories.

Definitions

Average hourly earnings
For several decades, the SEPH has been calculating an average hourly earnings rate for employees whose mode of compensation is “paid by the hour.” In 2013, these workers accounted for 58% of all workers in establishments classified in the SEPH, up from 52% in 2004 and 47% in 1983. The other categories are “employees with a fixed salary” (35% of workers in 2013) and employees paid otherwise, such as on a piecework basis (7% in 2013). Since 1983, businesses of all sizes have been included in the sample, whereas, before 1983, businesses with fewer than 20 employees were excluded.

With regard to the LFS, average hourly wage levels can be calculated back to 1997, either for all workers or for employees paid by the hour. In the LFS, only “usual” earnings are included, whereas in the SEPH, all types of earnings are included, including bonuses.

Four versions of the average hourly earnings are used in this article: two from the SEPH and two from the LFS:

  1. The first series, based on the SEPH, covers workers paid by the hour (excluding overtime) in the manufacturing sector in each province for the period from 1975 to 2013. The data have been retrieved from CANSIM tables 281-0022, 281-0004 and 281-0029.
  2. The second series, also based on the SEPH, covers all workers paid by the hour (excluding overtime). The data have been retrieved from CANSIM tables 281-0004 and 281-0029. This series begins in 1983, after businesses with fewer than 20 employees were added to the survey.
  3. The third series was calculated using the LFS, but on the basis of workers paid by the hour in industrial sectors covered by the SEPH (i.e. all industries except agriculture and other services). This series begins in 1997, when the LFS began collecting information on compensation.
  4. The fourth series was calculated from the LFS and covers all paid workers in all industrial sectors, whether they are paid by the hour or otherwise. In this series that also begins in 1997, the AHE is higher since the hourly earnings of employees with a fixed salary are higher than those of workers paid by the hour on average.

Minimum wage
Minimum hourly rates are obtained from Employment and Social Development Canada (ESDC) and can be viewed at http://srv116.services.gc.ca/dimt-wid/sm-mw/rpt2.aspx?lang=eng&dec=1.

The minimum wage for Canada as a whole is the average of the monthly minimum wages of the provinces, weighted by the number of workers in each province (see CANSIM tables 281-0015, 281-0001 and 281-0023). The number of employees for the federal government was unavailable from 1975 to 1982, but it was estimated at 40% of the number of all government employees for this period (percentage based on the values recorded for 1975). Starting in July 1996, the minimum wage for federal employees was that which prevailed in their province of employment. Therefore, no distinction has been made starting from that date.

Values in 2013 constant dollars
The values for the minimum wage and the average hourly earnings in real dollars were obtained using the all-items consumer price index specific to each province (see CANSIM table 326-0021).

Minimum wage legislation
The minimum wage—the lowest wage rate that an employer can pay its employees—is dictated by labour laws. Since these laws are under provincial jurisdiction, all Canadian provinces set a minimum hourly rate, which is adjusted periodically.

Self-employed workers and unpaid family workers are not covered by minimum wage legislation and are not included in this analysis. Other exclusions and special implementation provisions vary by year and province. For example, minimum wage legislation does not apply to domestic and family aid workers living with the employer (Alberta, New Brunswick, Prince Edward Island, Manitoba, British Columbia and Quebec); agricultural workers (Ontario); and home workers. Special minimum-wage rates may apply to some workers with non-hourly pay and tips.

In this article, minimum wage workers are those who receive the “minimum wage for experienced adult workers” that is set by their province. Also included are workers who receive a wage below this threshold. Hourly earnings below the established minimum do not necessarily indicate an infringement of the law—they may be received by workers not subject to the law or subject to rates below the minimum wage, such as some workers in food services (e.g. servers).

The proportion of workers paid minimum wage is obtained by calculating the number of employees working at minimum wage for each province and for each month since 1997. The annual estimate for each province is based on the average of the 12 monthly observations, while the total for Canada is the average of the provincial estimates.

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