TORONTO – The average minimum wage has remained unchanged in real terms for almost four decades, but economists say more recent increases are likely to continue in the coming years.
Statistics Canada said Wednesday the average minimum wage was $10.14 in 2013 and the 1975 wage, expressed in 2013 dollars, was $10.13.
Between 1975 and 2013, however, the minimum wage in 2013 dollars, varied, slipping to $7.53 in 1986 before rising to $8.81 in 1996 — and up to 2003, the real minimum wage remained stable at around $8.50.
“If you’re looking at it in terms of have we made any progress, well, in real terms, no, there hasn’t been any growth in almost 40 years adjusted for inflation,” said Doug Porter, chief economist with the Bank of Montreal.
“But the good news story is that it has come back meaningfully in recent years. That’s not necessarily good news to everyone — some employers could say that wage costs are making them a bit uncompetitive, although there I think the real issue is the currency, not wages.”
As a share of average wages, Porter added, the minimum wage has been climbing fairly steadily since the low was reached back in the mid-80s.
“Based on what certain provinces are doing, I think it’s fair to assume that it will continue to climb in the years ahead, even adjusted for inflation,” he said.
Derek Burleton, deputy chief economist at TD Bank, said the trend stems in part from a catch-up effect after years of government inaction, adding that the current rates are helping young people and low-income individuals, given some of the big cost increases households are facing, especially when it comes to housing.
“Overall, when I look at the recent trend of minimum wages, I think that given the fact they’ve been held stable for so long, they’ve been increased over a gradual period of time, it doesn’t seem like it’s had any huge impact on employment.”
After a period of significant decline in the minimum wage in real terms, Burleton added, the rebound over the past five to 10 years has positioned companies well to absorb the increases.
“We haven’t seen any major negative impacts, and if anything some of the positive effects may have won out,” he said
Erin Weir, an economist with the United Steelworkers, pointed out that the figures show that Canada’s lowest-paid workers “gained only a penny an hour over the past four decades.
But, he said that as many provinces are now indexing their minimum wages to inflation, “this problem should not repeat itself.”
“However, further increases above the inflation rate are needed to actually make low-paid workers better off than four decades ago,” he said.
The Statistics Canada report also found there is now a bigger portion of Canadians earning the minimum wage, with 6.7 per cent of all paid employees earning those wages in 2013, up from five per cent in 1997.
“To some degree, the increase in the proportion of minimum-wage employees during those years was the result of increases in the minimum-wage rate in many provinces,” Statistics Canada said.
“This is because a portion of those who were paid just above the former minimum rate became paid at the new, revised rate and joined the group of minimum-wage earners.”
Burleton said the increase in minimum-wage workers isn’t surprising in the face of falling unionization rates an a shift toward service jobs.
“This is an international trend where you’ve seen a shift toward industries that both pay toward the upper end of the income scale and the lower end, where the minimum wage shops fall,” he said.
Statistics Canada said young employees, less-educated employees, part-timers and people in service industries were most likely to be paid minimum wage.
The proportion of employees paid at minimum wage also varied by province in 2013, with Prince Edward Island and Ontario leading the pack.
Alberta had the lowest rate at 1.8 per cent.
Note to readers: This is a corrected story. An earlier version incorrectly stated the reference year for wages in 1986 and 1996.