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Perspectives on labour and income

Winter 2000 (Vol. 12, No. 4)

Incomes of younger retired women: the past 30 years (PDF)
Katherine Marshall

• Younger retired Canadians have become more reliant on pension income. In 1971, the Canada and Quebec Pension Plans and private pensions provided only 14% of total income for women aged 65 to 69 and 19% for men. By 1997, income from these sources had increased to 36% and 46%, respectively.
• Public and private pension income has helped raise the relative income of 65-to-69 year-old women—from 41% of men's in 1971 to 61% in 1997.
• The main source of income received by younger retired women in 1997 (34%) was still the combined Old Age Security (OAS) and Guaranteed Income Supplement (GIS). For men, the OAS/GIS represented only 19% of their income.
• Women's retirement pension income has risen because of their increased labour force attachment. Yet, although their years of service, earnings, and participation in pension plans have become increasingly similar to men's, considerable differences persist.
• Women still spend, on average, more time per week than men on unpaid work: 38 hours versus 22 for those aged 35 to 44. This naturally affects the time they have available for paid work (27 hours versus 43 for men in this age group) and, ultimately, their current and retirement incomes.

In for the long term: pension plans offered by employers (PDF)
Robert D. Anderson

• Over 5 million Canadian employees belonged to an employer- or union-sponsored pension plan in 1998. The total assets of these plans, also known as registered pension plans (RPP), exceeded $644 billion, much more than those of the public Canada and Quebec Pension Plans and individual registered retirement savings plans combined.
• One form of RPP, the "trusteed pension fund," has had great success investing contributions in the stock and bond markets. Investment income from these sources grew from $1.6 billion in 1976 to $20.5 billion in 1998, a more than 12-fold increase. The income from these investments now far exceeds the combined value of employer and employee contributions.
• Trusteed pension fund managers also buy and sell stocks. The industry as a whole has shown a net profit from these transactions for many years, and since 1990 the amounts have grown significantly, reaching $23.5 billion in 1998.
• Fund managers are legally obliged to ensure benefits for future retirees. The asset mix and investment strategies they adopted in the 1990s virtually guarantee that this obligation will be met.

Incomes of seniors (PDF)
John Myles

• During the 1980s, average real incomes among the population aged 65 and over increased 10%, a gain that went largely to seniors at the lower end of the income distribution.
• Among the one-fifth of seniors with the lowest incomes, disposable income rose 31% between 1980 and 1990, compared with only 1% among the one-fifth of seniors with the highest incomes.
• For seniors at the lowest income level, the changes were a direct result of higher benefits from three income sources: Old Age Security, the Guaranteed Income Supplement and the Canada and Quebec Pension Plans (C/QPP). For most seniors, the greatest source of income growth in the 1980s was C/QPP benefits, followed by private pension income.
• The C/QPP was introduced in 1966, but it was not until 1976 that the first people to receive full benefits reached age 65. At the outset of the 1980s, only the youngest seniors qualified for full benefits. This changed over the decade, and by the early 1990s retirement incomes showed the full effect of this income source.
• In 1980, 40% of seniors were in the lowest income group, compared with 20% of all Canadians. By 1995, their proportion in this category had fallen to 17%.

Income inequality within provinces (PDF)
Dimitri Sanga

• In 1998, for every dollar of market income (income before taxes and government transfers) for the 20% of economic families with the lowest incomes, the 20% with the highest incomes had, on average, $14.50. When the comparison is based on after-tax income, the inequality ratio was only $5.40.
• At both the national and provincial level, the inequality ratio was highest for market income and lowest for after-tax income for every year between 1980 and 1998.
• In 1998, Prince Edward Island had the smallest inequality ratio for after-tax income, while Alberta had the largest.
• From 1980 to 1998, the gap between the province with the lowest ratio for total income (income before taxes but after government transfers) and the one with the highest grew from 1.40 to 2.20, while the gap for after-tax income edged up from 1.10 to 1.90.
• Inequalities in market income tended to increase. The other two income measures reveal a similar tendency—though on a smaller scale—for the majority of provinces.

Autumn 2000 (Vol. 12, No. 3)

Unemployment kaleidoscope (PDF)
Deborah Sussman

• Unemployment can be measured in a number of ways. In addition to counting individuals out of work or looking for work, some analysts may include the families of those people (as they too may be affected). The period over which labour force status is measured is another important dimension of unemployment. As well as the standard one-week period, a one-year reference can be used.
• Family-based unemployment rates are consistently higher than individual-based ones, reflecting the family's greater exposure to the labour force and to the possibility of experiencing unemployment.
• Unemployment based on a one-year reference period also produces higher estimates of unemployment than the traditional one-week reference period. In general, annual rates tend to be almost double.

Taxes internationally (PDF)
Zhengxi Lin

• Personal income taxes constituted 38% of Canada's overall taxation of $325 billion in 1997. Taxes on goods and services accounted for 24%.
• In 1997, Canada's overall taxes as a percentage of gross domestic product (GDP) matched the G-7 average—higher than those of Japan, the United States or the United Kingdom.
• Personal tax amounted to 14% of Canada's GDP in 1997, the highest ratio among the world's richest nations.
• Corporate taxes amounted to 3.8% of GDP, a ratio that was in the middle of the G-7 pack.
• Payroll taxes totalled 5.7% of GDP, the lowest ratio among the G-7.
• The property tax-to-GDP ratio in Canada was the second highest of the G-7.
• Canada's goods and services tax ratio was nearly double that of Japan or the United States, but lower than those of the other four G-7 countries.

Payroll taxes—recent trends (PDF)
Zhengxi Lin

• Total payroll taxes collected from employees and employers amounted to over $48 billion in 1997—an average of $4,200 per wage-earner.
• Quebec led the provinces, with taxes averaging over $5,000. The lowest average taxes were in Prince Edward Island, New Brunswick and Saskatchewan.
• Payroll taxes stabilized at 5.7% of GDP (at market prices) after 1992, up from 2.8% in 1980. The highest rates were in the provinces with their own levies: 7.4% in Quebec, 6.1% in Newfoundland, 5.6% in Ontario and 5.5% in Manitoba.
• Revenues generated through payroll taxes accounted for 14% of all federal and provincial government revenues in 1996. They were much higher in Quebec and Ontario (16.1% and 15.4%) than in Saskatchewan or New Brunswick (9.3% and 9.6%).
• Employment Insurance premiums amounted to $19.7 billion in 1997, accounting for 41% of total payroll tax revenues. Canada and Quebec Pension Plan (C/QPP) contributions accounted for 32%.
• Quebec had the highest effective payroll tax rate. For every $100 of wages and salaries, employees and employers in that province paid $16.08 in 1997. Alberta had the lowest effective rate at $8.78 per $100.
• The total effective payroll tax rate more than doubled between 1980 and 1997, from $5.61 per $100 of wages and salaries to $12.23. Almost half the jump was due to rising Employment Insurance premiums, and one-quarter to increasing C/QPP contributions.

Non-unionized but covered by collective agreement (PDF)
Ernest B. Akyeampong

• In 1999, union membership in Canada totalled 3.6 million. An additional 287,000 employees who were not union members occupied jobs that were covered by collective agreements, and thus were entitled to union-negotiated settlements. The latter group, referred to in this study as "coverage-only" employees, constituted 7.4% (or one in 13) of all persons whose jobs were covered by a collective agreement.
• Coverage-only status is possible through any of four broad ways: by exercising rights provided under the "Rand Formula"; by being declared covered, as in the case of many foremen/women, supervisors or lower level managers; by virtue of serving a probationary period (especially newly hired employees); and through the extension or matching practices used by some employers for certain out-of-scope employees.
• In 1999, the chances of being covered by union-negotiated settlements without belonging to a union were higher for young employees, workers with short job tenure, those with more education, and workers in managerial, professional and scientific positions. The likelihood was almost non-existent among nurses and teachers.
• The proportion of women in jobs with coverage-only status was slightly lower than that of men. And the proportion for employees in the heavily unionized public sector was about half that of their counterparts in the private sector (one in 20 versus one in 10).
• The practice was also more common in Quebec and Alberta. Indeed, over 40% of all coverage-only employees in Canada resided in Quebec in 1999. It was least common in the Atlantic provinces.
• Although union density is lower in the United States, the coverage-only rate is higher there than in Canada: approximately one in 10 employees with a job covered by a collective agreement had coverage-only status in 1999, compared with one in 13 in Canada.

Rural roots (PDF)
Richard Dupuy, Franacine Mayer and René Morissette

• Labour market conditions are less favourable in rural areas. In 1996, the unemployment rate of people aged 15 to 29 who were not full-time students was 16.8% in rural areas, compared with only 11.9% in urban areas.
• All provinces saw a net loss of teenagers (aged 15 to 19) from their rural communities in the early 1990s, particularly Newfoundland and Saskatchewan.
• During the 1991-to-1996 period, roughly 30% of rural teenagers left their communities, compared with less than 20% of their urban counterparts.
• In all provinces except Newfoundland, persons leaving rural communities were more likely to go to an urban area within their province.
• Return migration has a limited effect on the rural population: only 20% to 22% of leavers in this study were back in their community 10 years later. Rural areas must therefore rely on inflows from other (primarily urban) areas to maintain their population.
• Persons who leave rural areas experience greater earnings growth than those who stay. For example, persons aged 25 to 29 in 1993 who left their rural community saw their earnings increase by 22% (or $4,400) between 1993 and 1997, compared with only 16% (or $2,900) for their counterparts who stayed in the community.

Summer 2000 (Vol. 12, No. 2)

Provincial earnings differences (PDF)
Kamal K. Sharan

• Average annual earnings in 1997 varied substantially across provinces, ranging from $19,200 in Prince Edward Island to $29,400 in Ontario.
• Average annual earnings are defined as the product of hourly earnings, weekly hours and annual weeks. Lower average annual earnings (relative to those of Ontario) were due primarily to lower average hourly wage rates. In British Columbia, however, lower average annual earnings were the result of fewer weekly hours and fewer annual weeks worked. On an hourly basis, workers in British Columbia on average earned more than their counterparts in Ontario.
• In some cases, average annual earnings would have been lower in Ontario, owing to the effect of one factor (the other two having been made equal-standardized). But the effects of the other two components were so strong that this province's overall average annual earnings remained highest.
• In the case of Ontario–Quebec and Ontario–Manitoba, Ontario's values were consistently higher in all three components. Therefore, no matter how the average annual earnings in Quebec and Manitoba are standardized, they were lower than those in Ontario.

Help-wanted Index (PDF)
Benjamin Amoah

• According to data from the 1980s and 1990s, the Help-wanted Index (HWI) (a measure of unmet labour demand) tended to be a predictor of labour market conditions.
• Rises in the index were followed some months later by a hike in the employment rate and a drop in the unemployment rate.
• The index was also positively (but weakly) associated with recent hirings (derived from the monthly Labour Force Survey). A much stronger relationship existed between the HWI and annual hirings (measured by the Longitudinal Worker File).

Payroll taxes-structure and statutory parameters (PDF)
Zhengxi Lin

• Payroll taxes have become an increasingly important source of government revenues. Total taxes collected from employers and employees amounted to $48 billion in 1997, 14% of combined federal and provincial government revenues.
• Nine payroll taxes are administered in Canada: two by the federal government, one by all provincial/territorial governments, and six by five provincial/territorial governments.

Income taxes in Canada and the United States (PDF)
Michael Wolfson and Brian Murphy

• For the one-third of families in Canada and the United States with incomes of less than C$25,000 in 1997, average effective tax rates were the same or lower in Canada.
• The largest difference (5.3 percentage points) in effective tax rates between the two countries was for families with incomes of $50,000 to $99,999.
• Except for the lowest income group, effective tax rates varied more widely in Canada than in the United States.
• The average effective tax rates in 1997 for families with incomes of $150,000 or more were 32.8% in Canada and 27.6% in the United States.

Knowledge workers on the move (PDF)
John Zhao, Doug Drew and T. Scott Murray

• The number of Canadian taxfilers who moved to the United States in 1997 is estimated to be between 14,000 and 23,000, an increase from the 8,000-to-12,000 range in 1991.
• Canada suffers a net loss of workers to the United States in a variety of key knowledge-based occupations. Only about 0.1% of people with employment income are reflected in this loss, however: less than 1% of the stock of workers in any one of these occupations.
• Of the 1995 university graduates who moved to the United States, a disproportionately high percentage (12%) were doctoral graduates. This may be partly the result of NAFTA provisions, which have made it easier for well-educated Canadians to live and work in that country.
• Some 0.9% of taxfilers with annual incomes of $150,000 or more left Canada in 1996, a migration rate nine times higher than that of all taxfilers.
• On the other hand, Canada receives more university graduates from elsewhere than it loses to the United States. For every university graduate migrating from Canada to the United States, four degree holders migrate from the rest of the world to Canada.
• Immigrants in the 1990s accounted for about one-third of the increase in employment among computer engineers, systems analysts and computer programmers.

Spring 2000 (Vol. 12, No. 1)

RRSPs in the 1990s (PDF)
Ernest B. Akyeampong

• The proportion of taxfilers with RRSP room (the eligibility rate) increased annually from 1991 (the year of relevant changes to the Income Tax Act) to 1997: from roughly 74% to a little over 81%.
• Similarly, the proportion of eligible taxfilers putting money into normal RRSPs (the participation rate) moved from 32.1% to 36.4%.
• Average contributions witnessed steady annual growth, rising from just around $3,000 per contributor in 1991 to over $3,900 in 1997, an increase of 31%. Total RRSP contributions rose from $13.5 billion to $24.1 billion.
• The growth from 1996 to 1997 in both average and total contributions was much less than in previous years, however.
• In spite of a recent slowdown in the growth of unused RRSP room, only 11% of eligible taxfilers—mostly those with incomes of $80,000 or over—used 95% or more of their room in 1997.

Earnings of lawyers (PDF)
Abdul Rashid

• Compared with 14% of all earners aged 25 and over in 1995, over half of lawyers were self-employed. On the whole, self-employed workers earned 2% less than employees. Lawyers with their own practice earned 41% more than those working for others.
• At $75,200, lawyers earned 146% more than the overall average of $30,600 and 71% more than workers with a university degree in a discipline other than law. Their longer work hours accounted for about 25% of the difference between their average earnings and the overall average.
• Over half of all workers aged 25 and over earned less than $30,000, and less than 2% earned $100,000 or more. Comparable proportions for lawyers were 24% and 23%.
• Between 1970 and 1995, the number of earners aged 25 and over increased by 77%, men by 41% and women by 154%. The number of lawyers increased by 258%; that of men in the profession did so by 161% and that of women, by an extraordinary 2,303%.
• Between 1980 and 1995, overall real average earnings fell 4%. Men lost 7%, while women gained 15%. In the case of lawyers, men and women gained 11% and 41%, respectively. However, because of the surge in the number of young female lawyers with lower earnings, average earnings of lawyers increased only 6%.

Update on gambling (PDF)
Katherine Marshall

• Wagers on non-charity gambling rose from $2.7 billion in 1992 to $7.4 billion in 1998, a 170% increase.
• Casinos have become the largest generator of gambling revenue, having surpassed video lottery terminals and lotteries.
• Average expenditure per participating household increased from $425 in 1996 to $460 in 1998.
• In contrast to 1992, when most gambling-related jobs were found in Western Canada, the bulk of employment in this industry in 1999 had shifted to Quebec (19%) and Ontario (48%).
• While full-time hourly earnings of employees in the industry have increased considerably, they still lagged the overall average in 1999.

Youth volunteering on the rise (PDF)
Frank Jones

• Between 1987 and 1997, the percentage of youth volunteering almost doubled, growing from 18% to 33%. The growth was especially strong in Ontario and Saskatchewan.
• Rising school enrolment rates were partly responsible for the growth, though the growing inclination to volunteer, especially by full-time students, was the main contributing factor.
• Multipurpose groups and service club organizations claimed the largest share of young volunteers. These include multipurpose women's groups, native and ethnic organizations, and bodies such as the Red Cross, Salvation Army and YM/YWCA.
• Full-time students were more inclined than other young people to volunteer for job-related reasons, although this was also an important motive for other youths.
• A large majority of youths reported the following benefits from their volunteering experiences: improved interpersonal skills, communication skills, knowledge, and organizational and managerial skills.

The school-to-work transition (PDF)
Geoff Bowlby

• Between 1989 and 1993, the proportion of 15-to-24 year-olds who were in school and not working increased from 29% to 38%. By 1998, it had grown slightly, to 40%.
• In 1989, about 22% of young people were going to school and working at the same time. This changed little over the 1990s, despite an increase in school attendance.
• Some 37% of young people were out of school and working in 1989. This proportion fell dramatically during the early 1990s, hitting 28% by 1993, where it remained for the next five years.
• The average length of the school-to-work transition was eight years in 1998 (beginning at age 16 and ending at age 23), following a pattern set in 1992. The transition had taken just six years (from age 16 to 21) in 1985.
• In 1996, compared with about 86% of postsecondary graduates, only two-thirds of high school graduates had found full-time work within a year.

Long working hours and health (PDF)
Margot Shields

• Switching from a standard 35 to 40 hours to a longer work week between 1994-95 and 1996-97 increased the risk of certain negative effects on workers' health, according to data from the National Population Health Survey (NPHS).
• For example, the odds of experiencing an unhealthy weight gain during that two-year period were twice as great for men whose hours of work had increased by 1996-97 than for those who continued to work standard hours.
• Men who changed from standard to long hours had more than twice the odds of an increase in daily smoking than men who continued to work standard hours; the corresponding odds for women were more than four times higher.
• Among female workers, those who changed from standard to long hours had higher odds of increased weekly alcohol consumption. Men's change in hours was not significantly related to increased drinking.
• Spending more time on the job was apt to reduce time available for exercise. Yet surprisingly, an increase in working hours was not significantly related to a decrease in physical activity for either men or women.

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