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Canada's middle-class jobs challenge


Good jobs are a central mechanism in the creation of shared prosperity.

What matters for workers is not just being able to find any job but also security of employment, level of pay, working conditions, and the opportunity to develop talents and capacities. 

Unfortunately, as has been documented in many studies, the long-term trend in Canada has been towards a much more polarized jobs market in which there has been a disproportionate increase in low pay, precarious jobs, and a concentration of income growth among higher-paid professionals and managers, especially the top 1%.

Governments, not least the Trudeau federal government, say they want to create good “middle class” jobs for all. But the scale of the current challenge, as shown by the most recent statistics from the Labour Force Survey, is not fully appreciated.

Looking first at unemployment. The national unemployment rate was 6.8% in June of this year, but the “real” unemployment rate including discouraged job seekers and the lost hours of those working part-time on an involuntary basis was 9.1% overall and 17.7% for young workers.

The employment rate – the percentage of working age persons with a job, any job – was 61.0%, still almost two percentage points below the level in 2008 before the great recession. In short, it is still very hard for many workers to find any kind of employment.

Of all persons who are counted as employees, one in seven (or 14.7%) are in temporary jobs. Furthermore, of those who are counted as employed, 15.4% are self-employed. Many who are working for themselves or in temporary positions would prefer jobs as permanent employees but are unable to find them.

Turning to pay, the average hourly wage in June was $25.55, and the median hourly wage – meaning one half of the work force earn more and one half earn less – was  just $22 per hour — enough to provide a modest annual income of $44,000 per year for a person working full-time in a permanent job with no periods of unemployment.

It is interesting to note that the Liberal government's so-called “middle-class” income tax cut only applies to persons with a taxable annual income of more than $45,000.

Statistics Canada data show that median hourly earnings of persons age 25 to 54, so-called core age workers, were $24.50 in 2015. Of all employees in June, 2016, 11.1% earned less than $12 per hour, and another 30.9% earned between $12 and $20 per hour.

While a total of 42% of all employees earned less than $20 per hour, this was true of almost one half or 47.4% of all women workers and more than one in three or 36.8% of all male workers.

Definitions and opinions differ on who should be considered to be “middle-class.” Many lower wage workers live in families with decent overall incomes, and income from wages is boosted by government programs such as child benefits and unemployment insurance. Still, the numbers show that a  significant minority of Canadians work in jobs which are insecure, and a surprisingly high proportion work in jobs which are low paid or very modestly paid. Indeed, the proportion of low paid workers in Canada, defined as earning less than two-thirds of the median wage, is, at 21.8%, the third highest in the industrialized world, according to the OECD.

Raising wages for lower-paid workers will require boosting minimum wages to at least $15 per hour and widening access to union representation, especially for workers in private sector sales and service jobs. These measures are critical to any realistic strategy to “grow the middle-class.”

Andrew Jackson is a Senior Policy Advisor with the Broadbent Institute.