The minimum wage hasn’t risen since 1975, and young people are hit hardest

Proportion of employees paid minimum wage grows according to new StatsCan report

9

“Organic” was as much a grocery store and coffee-shop buzzword in the 1970s as it is today, and there’s another thing that workers in those businesses from 40 years ago have in common with their present-day counterparts: wages. Canada’s minimum wage hasn’t risen in real terms since 1975, according to Statistics Canada.

In a finding that will be little surprise to high-schoolers looking for a part-time gig or college and university graduates seeking a first permanent position, StatsCan says young employees are most likely to be paid the minimum wage:

Chart showing proportion of Canadian youth 15–24 paid minimum wage

Minimum wage levels are set by the provinces, and Ontario’s decision to raise its baseline requirement to $11 an hour earlier this year sparked significant debate about the economic impact on workers and employers. Mike Moffat suggested that a careful balancing act is required:

So what is the goal of the minimum wage? It appears to be to ensure there is a minimum dollar figure attached to someone’s hourly labour, though with a raft of unpaid internships in Ontario that are jobs in disguise, we should question how effectively we are meeting even that modest goal. However, as long as there is not significant job loss or reduction in economic growth, there does not appear to be a great deal of harm in having a higher minimum wage even if the benefits are relatively modest.

READ: Here’s what a truly fair minimum wage would look like »

More and more businesses are paying the lowest rate possible, according to StatsCan: the proportion of all paid employees earning the minimum wage in 2013 was 6.7%, up from 5.0% in 1997. Saskatchewan is the latest jurisdiction to announce a baseline hike, a paltry ¢20 raise that brings the province up to a barely-average $10.20.

Stagnant wage growth isn’t just a problem for those at the bottom of the salary scales: middle-class family incomes are slightly lower now than they were in the 1970s.

READ: Roundtable: Middle class wage growth and how to fix it »

Well-paid, secure jobs seem to be proving increasingly elusive for most Canadian millennials, and an unpaid internship coupled with minimum wage work is the growing standard. Last month the left-leaning Broadbent Institute called for a Youth Employment Guarantee to try and fix the problem of chronic underemployment.

Canada’s labour market isn’t as broken as we’re being led to believe, according to Stephen Gordon, and that’s particularly true of youth:

Youth unemployment is actually pretty low by historical standards; the only time it was lower was during the boom years just before the recession. On the other hand, employment rates are still low. This is the same thing as saying that youth participation rates have fallen. It’s not immediately obvious whether that’s a bad thing. If young people are going back to school and/or topping up their skills in formal training programs, a lower participation rate now may mean good things for the future.

READ: Canada’s labour market is closer to ‘normal’ than you think »

Still, Gen-Yers will take little comfort in knowing they’re making as much today as their 1970s counterparts. At least we’ve managed to get rid of the bell-bottoms and disco.

9 comments on “The minimum wage hasn’t risen since 1975, and young people are hit hardest

  1. Minimum wage “hasn’t risen in real terms since 1975″… Why is that a bad thing? Doesn’t that mean that minimum wage is keeping up with inflation?

    Reply

    • No. It means business wants to keep costs down in order to maximize profits and government doesn’t want to deal with a contentious problem.

      Reply

  2. Anyone working for minimum wage probably also does not have any benefits. Therefore, I would classify them as the “working poor”. I have experience with this. I am helping to support two grown daughters who cannot (just like the t.v. ads) buy both food and pay rent. I have also paid for dental work, etc. What does someone with no backup do??

    Reply

  3. Headline…Minimum wage hasn’t risen since 1975!

    Story “in real terms”
    Quite difference. Sensational headline again. Considering the global economy and global pressure I would think that minimum wage staying the same in “real” terms is good news. We could be dropping like a stone in compensation.

    Reply

    • Minimum wage today does the same as minimum wage did in the 70′s – squat!
      You couldn’t live a respectable life, especially with family, on minimum wage THEN, and you can’t do it NOW.
      Both our governments AND employers alike see to that. It’s what helps them justify a wage of
      $13.00-$14.00/hour as a so-called “GOOD” wage – which it isn’t. So our highly profitable companies share less than ever their profits because as we know, it’s ONLY about the bottom line and management bonus’.
      It will always be this way.

      Reply

  4. I guess there are still some remnants of the free enterprise system in place that allow businesses to pay what they think labour is worth. Not to worry, though, our ever increasing socialist governments, whether liberal or conservative, will soon put an end to this travesty. Government will decide what a fair wage needs to be then require those boorish, nasty, selfish, greedy, etc. businesses to PAY! Come on, hop to it!

    Reply

  5. If we didn’t buy so much useless stuff we wouldn’t need so darn much money, If we earned less money housing, basic vehicle and non-essential food prices would also decline considerably as a result. And we would all be happier and no doubt considerably more fit and healthy — and property, life and health insurance premiums would also cost less . Viva deflation.

    Reply

  6. In the succession game the rich do in fact get richer and the poor remain the same. Not having the abilitiy to change these facts becomes self evident from their weaken position in even aquiring an income, but meanwhile the housing costs are ‘as per rental’ relate to economic failure and eventual depression of our youth. One may say ‘C’est la vie’; perhaps the formula is to give the lowest a $5000 incentive to just stay employed for more than 10 months of the year. Heaped as a service charge for those that pay less than $20000 a year. Hear me heaped (all those that pay less than $20000 a year) pay a service charge to help our less econmically able. It is one to complain it is further to offer a solution.

    Reply

  7. Raising the minimum wage would obviously help those who kept their jobs but those left behind would be the least employable with the lowest skill levels (I.e. The young and especially minorities) robbing them of the opportunity to build up their skills and work experience.

    Companies would just, on the margin, substitute by increasing automation, reducing overtime etc.

    Those most hurt would likely be the most vulnerable.

    Reply

Leave a comment

Your email address will not be published. Required fields are marked *