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Grace Iyabosa, seen with her daughter Pride, does overnight shift work in an Ottawa hospital for $10.25 per hour. (Dave Chan For the Globe and Mail)
Grace Iyabosa, seen with her daughter Pride, does overnight shift work in an Ottawa hospital for $10.25 per hour. (Dave Chan For the Globe and Mail)


'Working for nothing': Canada joins global minimum wage debate Add to ...

Grace Iyabosa sits with hospital patients through the long nights, close at hand in case they need help.

The single mom works eight- or 12-hour shifts in Ottawa, on call, which means she often has to scramble to find child care for her two kids, ages seven and 11. She earns minimum wage of $10.25 an hour. After paying for food, babysitting and more than $600 for rent, there is nothing left at the end of the month.

“I don’t want to be at home.

I don’t want to be on welfare. I want to be a good role model for my kids.

“But it’s like I’m working for nothing,” said Ms. Iyabosa, 41.

She is one of many low-wage workers in Canada who are working hard but not getting ahead.

More than a million people across the country worked for minimum wages or less last year, the fourth year in a row that number has been above the one million mark, according to Statistics Canada data. Since 2000, their numbers have nearly doubled.

The debate about the lot of low-wage workers is a global one. American fast-food workers have gone on strike to demand higher pay.

British politicians are pressing for minimum-wage hikes. The Swiss are considering a mandatory basic income for everyone while Cambodian garment workers are calling for better wages.

At last week’s World Economic Forum in Davos, Switzerland, leaders listed income inequality – and social tensions it causes – as the top risk facing the global economy in the coming decade.

In Canada, public attention is growing on various policy responses, from raising minimum wages to introducing living-wage legislation or testing, again, the idea of a basic income supplement. Proponents of a higher minimum wage say it will strengthen local economies, while some in the business community warn such a move would hurt employment.

On Monday, a panel studying Ontario’s minimum wage is to release its recommendations, with the province expected to announce an increase shortly, as well as a mechanism to automatically increase the minimum wage in future.

Last year, the share of the Canadian work force toiling for minimum wage or less was 6.7 per cent, down from a year earlier but a higher portion than before the recession. In the decade to 2008, the share was less than 5.2 per cent.

Minimum wage was about 25 per cent higher in the mid-1970s than it is today when the cost of living is factored in, said Rafael Gomez, labour economist and associate professor of industrial relations at the University of Toronto.

The number of low-wage workers has swelled since the 1990s for several reasons: a drop in private-sector unionization, free trade and globalization that increased the supply of labour, and technology that is displacing low-end jobs. Government restraint and the growth of traditionally low-paying jobs such as retail are also playing a role.

Mr. Gomez said that the consequence of low wages is that society has “a missing middle, a huge explosion of pay at the top” and many more low-wage workers. He said measures such as gradual minimum-wage hikes or basic income policy would help counterbalance the effect of declining unionization without destroying the economy.

And Canada’s job market is becoming more polarized as “wages in high-paying industries are rising faster than low– and mid-paying industries – probably reflecting supply factor,” said Benjamin Tal, deputy chief economist at CIBC World Markets. Sluggish wage growth at the bottom, partly due to a lack of bargaining power, “suggests that the income gap will continue to widen.”

Low-wage jobs – positions that pay 20 per cent or more below the average – constitute about 28 per cent of paid, full-time employment, Mr. Tal noted, adding that this demographic will struggle to increase savings, particularly for retirement, and be more vulnerable to higher interest rates.

Relatively benign inflation has cushioned some of the weak wage growth. But although official inflation rates have stayed low in the past few years, many people aren’t feeling it because food and shelter costs, which make up a greater share of a low-income person’s budget, have climbed.

Opinions differ on what to do. A jump in minimum wage would kill jobs, says the Canadian Federation of Independent Business. It estimates that every 10-per-cent hike in minimum wages could trigger up to 321,000 job losses nationally, put cost pressures on smaller businesses and disproportionately hurt students and temporary workers. The group favours more tax exemptions on low-income workers and a boost to government investment in training for skilled trades, moves it says would give workers a higher disposable income, better prepare them for the work force and be less onerous for business.

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