Current Publications: Employment and labour

Contents

• 1 Introduction
• 2 Measuring the Gender Wage Gap
  
  • 2.1 Comparing the Annual Earnings of Women and Men
  • 2.2 The Full-year, Full-time Wage Gap
  • 2.3 The Hourly Wage Gap
• 3 International Comparison: The Gender Wage Gap in for Economic Co-operation and Development (OECD) Nations
• 4 Historical Trend in the Gender Wage Gap
• 5 Will the Gender Wage Gap Close for Younger Cohorts?
• 6 Why Is There Still a Wage Gap?
  
  • 6.1 Human Capital Factors
  • 6.2 Demographic Characteristics
  • 6.3 Job Characteristics
• 7 The Economic Importance of Women’s Earnings
• 8 Conclusion
• Notes

1 Introduction

Statistical evidence demonstrates that women continue to earn less than men in Canada, as in all the countries that are members of the Organisation for Economic Co-operation and Development (OECD). This is the case despite the fact that women are catching up with men in labour force participation, and have caught up with men in educational attainment. The gap between what women earn and what men earn is known as the gender wage gap.

This paper will provide statistical data on the gender wage gap, and explore the factors that contribute to this gap, including the fields of study that women select, the continued over-representation of women in certain sectors of the economy, and women’s division of time between caregiving and paid employment. Public policy proposals to address this gap are outside the scope of this publication.

2 Measuring the Gender Wage Gap

There are a number of ways to compare the earnings of women and men in Canada, all of which indicate that women earn less than men. The various measures are presented below.

2.1 Comparing the Annual Earnings of Women and Men

A common way to measure the gender wage gap is to compare the total annual earnings of all men and women. This measure does not distinguish between part-time and full-time employment. It includes the wages of all men and women, including full-year full-time workers, workers working full time but during part of the year only (e.g., seasonal workers), and part- time workers. Using this measure, the annual earnings of women in 2008 were 64.4% that of their male counterparts.1

Some argue that this measure is too general, noting that comparing annual income does not tell us whether women earn less because they work fewer hours, or because they work in different sectors of the economy, or because employers pay women less than men for similar work. One reason why women earn less than men on an annual basis is that women are much more likely to work part time. In any given month in 2009, there were twice as many women working part time as men.2 Does the gender wage gap, then, result only from the fact that women work fewer hours than men? To see whether women who work full time earn as much as their male counterparts, it is helpful to compare the earnings of full-year, full-time workers. This is the next measure we will examine.

2.2 The Full-year, Full-time Wage Gap

The full-year, full-time wage gap is the most commonly cited indicator of the gender wage gap in Canada. This measure compares the average income of full-time earners only. Table 1 presents data on the gender wage gap for full-year, full-time workers in Canada. According to this measure, women working full-year, full-time in 2008 earned 71.4% as much as their male counterparts.3

Table 1 – Average Earnings of Full-year, Full-time Earners (2008 constant dollars)

Year	Males	Females	Ratio
1978	54,400	34,400	0.63
1988	53,800	35,100	0.65
1998	56,300	40,500	0.72
2008	62,600	44,700	0.71
Source: Table prepared by the author using data obtained from Statistics Canada, “Distribution of earnings, by sex, 2008 constant dollars, annual,” Table 202 0101, CANSIM (database), Using E STAT (distributor), 10 September 2010.

Average earnings can be skewed by a small number of people who earn extremely high salaries, and most such salaries are earned by men. To minimize the impact of this small group of high-income earners, it is useful to compare the median earnings of women and men.4 The median earnings of men and women who are full-year, full-time earners, provided in Table 2, show that women make about 76% as much as their male counterparts.

Table 2 – Median Earnings of Full-year, Full-time Workers (2008 constant dollars)

Year	Males	Females	Ratio
1978	50,600	31,200	0.62
1988	49,700	32,100	0.65
1998	49,000	36,300	0.74
2008	50,600	38,600	0.76
Source: Table prepared by the author using data obtained from Statistics Canada, “Distribution of earnings, by sex, 2008 constant dollars, annual,” Table 202-0101, CANSIM (database), Using E-STAT (distributor), 10 September 2010.

2.3 The Hourly Wage Gap

The hourly wage gap allows us to compare how much women make for an hour of work compared with men. Unlike the full-time, full-year measure, comparing the hourly wage allows us to include men and women in non-standard work arrangements, including part-time or part-year work. As Table 3 illustrates, this measure demonstrates that women aged 25–54 earn about 85% as much per hour as their male counterparts.

Table 3 – Average Hourly Wage, Workers Aged 25–54 (Current dollars)

		Males	Females	Ratio
Total employees	All employees	25.91	22.00	0.849
	Employees with union coverage	26.96	25.28	0.937
	Employees without union coverage	25.42	20.18	0.794
Permanent employees	All employees	26.38	22.24	0.843
	Employees with union coverage	27.17	25.53	0.926
	Employees without union coverage	26.00	20.46	0.786
Temporary employees	All employees	21.01	19.75	0.940
	Employees with union coverage	24.85	23.29	0.939
	Employees without union coverage	18.94	17.26	0.911
Source: Table prepared by the author using data obtained from Statistics Canada, “Labour force survey estimates (LFS), wages of employees by job permanence, union coverage, sex and age group, annual (current dollars),” Table 282 0074, CANSIM (database), Using E-STAT (distributor), 10 September 2010.

A number of factors affect the hourly wage gap. For example, Table 3 indicates that the hourly wage gap is larger in non-unionized jobs (in which women earn 79% as much as their male counterparts) than in unionized jobs (in which they earn about 94%). As Table 4 indicates, the gap also differs significantly among various occupational categories.

Table 4 – Average Hourly Wage, by Sex and Occupation, 2008

Occupation	Males ($)	Females ($)	Ratio
Management occupations	36.50	29.11	0.80
Business, finance and administrative occupations	23.86	20.29	0.85
Natural and applied sciences and related occupations	31.43	27.66	0.88
Health occupations	25.78	25.19	0.98
Occupations in social science, education, government service  and religion	30.68	26.69	0.87
Occupations in art, culture, recreation and sport	24.14	23.89	0.99
Sales and service occupations	19.72	14.33	0.73
Trades, transport and equipment operators and  related occupations	22.59	16.81	0.74
Occupations unique to primary industry	21.53	14.97	0.70
Occupations unique to processing, manufacturing and utilities	20.95	14.83	0.71
Source: Table prepared by the author using data obtained from Statistics Canada, “Labour force survey estimates (LFS), wages of employees by type of work, National Occupational Classification for Statistics (NOC-S), sex and age group, annual (current dollars unless otherwise noted),” Table 282-0070, CANSIM (database), Using E-STAT (distributor), 15 July 2010.

3 International Comparison:
The Gender Wage Gap in for Economic Co-operation and Development (OECD) Nations

The gender wage gap exists in most countries. The OECD collects and compares data on the median earnings of full-time employees for selected OECD countries. As Figure 1 demonstrates, gender wage gaps are largest in Asian OECD countries. Canada and the United Kingdom have the fourth largest gender wage gap among OECD countries.

Figure 1 – Gender Gap in Median Earnings of Full-time Employees,
2006 or latest year available

Source: Organisation for Economic Co-operation and Development, Directorate for Employment, Labour and Social Affairs, “LMF1.5.A: Gender gap in median earnings of full-time employees, 2006 or latest year available,” OECD Family database, 1 July 2010.

The OECD also reports on the wage gap among low-income earners and high-income earners. Figure 2 shows the gender gap in earnings at the lower (20^th percentile) and higher (80^th percentile) points in earnings distribution. It shows that low-income women in Canada face a larger wage gap with their male counterparts than low-income women in most other OECD countries. Higher-income women in Canada, on the other hand, fare better in Canada than in all but six OECD countries.

Figure 2 – Gender Gap in Full-time Earnings at the Top and Bottom of the Earnings Distribution,
2006 or Latest Year Available

Source: Organisation for Economic Co-operation and Development, Directorate for Employment, Labour and Social Affairs, “LMF2.5: Time used for work, care and daily household chores,” OECD Family database, 1 July 2010.

4 Historical Trend in the Gender Wage Gap

Although laws have been in place since the 1960s to guarantee equal pay for equal work,5 women and men in Canada have not yet achieved equality in earnings. The gender wage gap closed rapidly between 1976 and the beginning of the 1990s; however, as Figure 3 indicates, progress since that time has been limited.

Figure 3 – Evolution of the Gender Wage Gap, 1993–2008:
Women’s Annual Earnings as a Percentage of Men’s Annual Earnings

Source: Table prepared by the author using data obtained from Statistics Canada, “Female-to-male earnings ratios, by selected characteristics, 2008 constant dollars, annual (percent),” Table 202-0104, CANSIM (database), Using E-STAT (distributor), 13 September 2010.

5 Will the Gender Wage Gap Close for Younger Cohorts?

There is a common perception that the gender wage gap is likely to disappear for people now entering the labour force. To gauge the validity of this proposition, Table 5 presents the ratio of median earnings of women and men by age group over the past three decades. As noted earlier, comparing median earnings provides a better picture of the majority of the population, as it minimizes the distortions created by extreme ends of the earnings range.

Table 5 – Female-to-Male Median Earnings Ratio, Canada, Comparison at Four Timepoints

Age Group	Year				Percentage Point Difference from 1980 to 2008
	1980	1990	2000	2008
15 to 24 years	78.1	97.0	90.3	74.0a	−5.0
25 to 34 years	67.6	73.7	76.8	76.6	9.0
35 to 44 years	57.6	66.0	69.9	70.7	13.1
45 to 54 years	59.2	60.3	69.5	78.2	19.0
55 years +	61.6	67.6	71.0	77.4	15.8
a The coefficient of variation for this figure is between 8% and 16%, which means that Statistics Canada identifies this number as “acceptable” but not “excellent.” This figure is thus somewhat less reliable than the others in this table. [ Return to text ] Source: Table prepared by the author using data obtained from Statistics Canada, “Female-to-male earnings ratios, by selected characteristics, 2008 constant dollars, annual (percent),” Table 202-0104, CANSIM (database), Using E-STAT (distributor), 13 September 2010.

Using this measure, we see that in fact, during the period shown, the wage gap between men and women consistently widened between the ages of 25 and 44. For example, the generation of women who were between 15 and 24 in 1990, earning 97% as much as their male counterparts, earned only 76.8% as much 10 years later and 70.7% as much in 2008. Why is this the case?

6 Why Is There Still a Wage Gap?

While all credible data point to an ongoing gender wage gap, there is a difference of opinion about whether this gap is problematic. Some argue that the gap does not reflect direct discrimination by employers, but rather the decisions that women make in career choices and work–family balance. Others suggest the gender wage gap highlights ongoing inequalities between men and women. They point out that occupations perceived as “women’s jobs” have been underpaid compared with “men’s jobs” because of a historical undervaluing of women’s skills and work.

Most economists agree that wage structures reflect a variety of human capital factors (such as experience, education and tenure), demographic characteristics (such as marital status and presence of children), as well as job characteristics (such as union status, part-time status, occupation, industry and firm size).6

We will explore some of the factors economists have identified as contributing to the wages people receive.

6.1 Human Capital Factors

The human capital factors affecting income include job experience, education and tenure. Although women continue to catch up with men in labour force attachment, and have for the most part caught up with men in educational attainment, the wage gap has remained largely unchanged since the 1990s. Research indicates that human capital factors explain a large portion of the wage gap before the 1990s, but are generally no longer considered to account for a substantial portion of the gender wage gap.7

While a higher level of education is generally associated with higher pay, the field of study is also important. Statistics Canada data indicate that men and women continued to select traditional fields of study in the 1990s, which may have prevented the gap from further declining. In fact, this selection of traditional fields of study may have contributed to increasing the gap. Statistics Canada has noted, “Women are far more likely to study health and education, two largely public sectors that saw substantial wage freezes and rollbacks in the 1990s. On the other hand, men are more likely to study engineering and other technology fields, which proved to be a lucrative choice during the high-tech boom of the late 1990s.”8

6.2 Demographic Characteristics

Demographic characteristics include marital status and the presence of children. There continue to be expectations based on gender arising from these demographic characteristics. For example, women continue to take on a larger portion of unpaid household work than men. Statistics Canada conducts a time use survey to measure how Canadians spend their time. The latest data from this survey indicate that, while women and men work the same number of hours for pay each day, women spend almost two hours more per day on unpaid work.9 While this gap is slowly closing as men take on a larger share of unpaid household work, studies have demonstrated that women are more likely than men to make labour force choices that allow them to balance their caregiving responsibilities. Time use surveys indicate:

Although part-time work may be a personal choice and encourage the involvement of women in the workplace, the gap between women and men underlines the fact that they do not use their time in the same way and that the task of looking after dependent family members is largely borne by women.10

Women are much more likely than men to balance their home and work lives by working part-time. In any given month in 2009, there were twice as many women working part-time as men. When asked why they work part-time, men and women provide very different answers. Most significantly, 19% of women work part-time to provide care for children or to take care of other personal or family responsibilities, compared with 2% of men.11

Recent studies show that the more children a woman has, the lower her hourly pay. For men, the opposite tendency applies. Men with children have higher hourly pay than men without children. The wage gap is small or non-existent for never-married men and women.12

In an article on the male–female wage differential, Canadian economist Morley Gunderson recognized the significant contributions of women’s role in the household to the gender wage gap:

Factors emanating from women’s role in the household (e.g., reduced hours in the labour market, reduced mobility because of household ties, education that is less labour-market oriented, interruptions in labour market careers, willingness to pay for workplace amenities that are family friendly) are important determinants of the pay gap.13

6.3 Job Characteristics

Much of the gender wage gap can be explained by differences in the workplaces of women and men – industries, size of establishment, and types of work. Research consistently indicates that “women are concentrated in low-paying occupations, industries, establishments and occupations … and that gender segregation accounts for a sizable portion of the overall gender wage gap.”14

The workforce continues to be largely segregated into “male” jobs and “female” jobs. For example, men have higher representation rates in manufacturing as well as in construction, transportation, wholesale and trade. Women are predominantly concentrated in retail services, education and health industries and are more likely to work in small firms (fewer than 20 employees).15 Fifty-six percent of women work in two occupational categories: sales and service, and business, finance and administrative.16

According to data from the 2006 Census, “women between the ages of 25 and 54 make up the overwhelming majority of those in the 20 lowest-paid occupations. In 13 of the 20, they account for more than two-thirds of the workers while men are the majority in only three of them.”17 On the other hand, men dominate the 20 highest paid occupations in Canada.

7 The Economic Importance of Women’s Earnings

Only a generation ago, it was widely accepted that a woman in the labour force was either a “single woman biding … time until marriage, or married woman working for ‘pin money.’”18 There was not a general expectation that a woman’s work should provide a living wage for a family.

For many families in Canada, the income of women today represents much more than “pin money,” with many two-parent families reliant on the income of both parents to meet their basic needs. Whereas 39% of couples relied solely on the earnings of the husband in 1977, only 20% of families relied only on the salary of the male breadwinner in 2006. Table 6 indicates that most husband–wife families are reliant on the income of both partners. In close to 28% of families, the wife contributes more than the husband to the total employment income of the family.19

Table 6 – Contribution of Wife to Employment Income of Husband–Wife Families, 2006

Percentage of Employment Income Contributed by Wife	Percentage of All Families	Number of Children in Family, Percentage of Families
		0	1	2	3+
0	19.71	23.63	16.98	15.31	21.52
1–25	19.63	14.27	21.40	23.98	25.40
26–50	32.69	29.14	34.23	36.97	32.45
51–75	14.68	15.07	14.98	14.86	12.15
76–99	5.10	6.09	5.03	4.16	3.76
100	8.19	11.80	7.37	4.72	4.73
More than 50	27.96	32.97	27.38	23.74	20.63
Source: Table prepared by the author using data obtained from Statistics Canada, “Family characteristics, husband-wife families, by wife’s contribution to husband-wife employment income, annual,” Table 111-0021, CANSIM (database), Using E-STAT (distributor), February 2010.

The past 30 years have also seen a significant increase in single-parent families and in women living on their own, where women’s employment is likely to be the main or only source of income. It therefore becomes important, for economic and equity reasons, to understand why women continue to earn less than men.

8 Conclusion

Although direct discrimination is illegal, there is an ongoing gender wage gap in Canada. As Canadian labour economist Morley Gunderson has written, “there does not appear to be a single dominant factor that would sustain discriminatory wage differentials. Nevertheless, the sum total of a number of small contributing factors can add up to a substantial constraining influence.”20 As discussed, two central factors that contribute to the gender wage gap are the concentration of women in a small number of lower-paying jobs, and the fact that women are more likely than men to make accommodations to balance paid and unpaid work.

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Notes

†  Library of Parliament Background Papers provide in-depth studies of policy issues. They feature historical background, current information and references, and many anticipate the emergence of the issues they examine. They are prepared by the Parliamentary Information and Research Service, which carries out research for and provides information and analysis to parliamentarians and Senate and House of Commons committees and parliamentary associations in an objective, impartial manner. [ Return to text ]