Minimum wage hikes help reduce income inequality, report shows

Posted on October 24, 2018 in Debates – Politics/Federal Politics
Oct. 23, 2018.   By

OTTAWA—Increases in minimum wages across the country have helped reduce income inequality, according to a new report from the parliamentary budget office.

“Relatively larger” wage gains at the lower end of the wage scale reduced wage inequality between 1997 and 2018, according to the office’s latest assessment of the labour market.

Those gains were due in part to increases to minimum wage rates across the country — notably in Ontario and Alberta — that went far to help those with the lowest incomes, the report said.

“Increases to the minimum wages have contributed significantly to reducing wage inequality and it’s helped particularly those at the low end of the income spectrum,” said Yves Giroux, the parliamentary budget officer.

“It’s due to increases in the minimum wages that they have seen their incomes rise faster than those in the middle,” Giroux said in an interview Tuesday.

The analysis came on a day when the Progressive Conservative government at Queen’s Park announced that it was scrapping a $1-an-hour increase to the minimum wage rate in Ontario that had been scheduled for January. Instead, the minimum wage will remain at $14 an hour for the next two years.

The previous government under Liberal premier Kathleen Wynne committed to a $2.60 increase in the minimum wage to $14 an hour in 2018, and $15 by 2019.

The report notes significant increases to minimum wage rates starting around 2005 and says that since 2013, wage gains at the lower end of the scale — averaging 3.1 per cent a year — have outperformed those in the middle of the range, with gains averaging just 0.6 per cent a year.

“Minimum wage increases in most Canadian provinces from the mid-2000s onwards have had a significant impact on wage growth at the lower end of the distribution, at both the national and provincial levels,” the report found.

The report also found that while wage gains for women have exceeded those for men since 1997, there remains a “considerable gap” in the wages paid for men and women. That gap is narrow at the low and upper ends of the wage spectrum but widens in the middle, as much as 19 per cent.

The report found that real gains at the lower and upper ends of the wage spectrum exceeded those in the middle of the range.

Giroux cautioned that his office’s report does not account for factors such as experience or education levels that might explain some of the wage differences. But he said the findings do drive home continuing inequities in the labour market.

“That’s a very good picture of what happens in real life in Canada, men versus women,” he said.

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