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Young people earning less than parents did: census
Thursday, May 1, 2008
OTTAWA—Young people entering the job market today may be better educated, but they’re earning less money than their parents did a generation ago, according to new census data released today by Statistics Canada.
In fact, it’s a trend that began a quarter-century ago and doesn’t appear to be slowing down—especially for young men entering the workforce.
That stagnation mainly afflicted the middle class. The top earners in Canada saw their wages increase 16.4 percent since 1980 while the bottom rung saw a 20 percent decrease.
For the 25- to 29-year-old group, it’s also a story of decreasing fortunes.
In 1980, median earnings for full-time male workers in that age group—the time when people are generally starting their careers—were the equivalent of $43,767 in 2005 wages.
By the year 2000, they dipped to $38,110 and in 2005 they stood at $37,680.
While women traditionally have earned less than men, the year-over-year drop has proven far less dramatic.
In 1980, young women made $32,813 in inflation-adjusted dollars. Their median salaries dropped a mere $234 by 2000 and in 2005 they were $32,104.
“When people reach the age of 30 or 35, many of them have accumulated less money than their counterparts did in the mid-1970s,” Statistics Canada analyst Rene Morissette said.
He attributed the trend to the fact young people are staying in school longer, young men seem less likely to find full-time work once out of school, and that those who do tend to be paid lower wages.
The trend towards reduced wages for young males is one that emerged in the early 1980s in many economically-developed countries, Morissette said, noting economists speculated new technologies were pushing out young workers.
Others believed the recession during that time may have prompted employers to try to cut labour costs by reducing the wages of fresh hires in order to avoid seriously harming morale and productivity among senior workers.
“In 2008, it’s fair to say we still don’t have a good understanding of why wages of young men fell back then,” he said, adding there are some more plausible explanations.
The decline of the manufacturing sector in Ontario and Quebec—exacerbated in recent years by the loss of many automotive jobs and outsourcing to countries with cheap labour costs—has resulted in a 20 percent reduction in the number of blue collar union jobs, as well as lower wages for those who remain, Morissette said.
“We know unionized jobs pay usually 10- to 15-percent higher wages than non-unionized jobs, and that has certainly contributed to reducing the wages of young men during that period,” he noted.
According to the latest census data, the salaries of blue-collar labourers in processing, manufacturing, and utilities, for example, fell four percent between 2000 and 2005 while machine operators and fabric, fur, and leather product manufacturers dropped more than seven percent.
Even though unemployment is low in Canada, there’s been a shift towards a service-based economy—sometimes referred to as the Wal-Martization of the workforce.
Often paired with lower salaries, Morissette suggested it’s responsible for about 15 percent of the decline in young people’s wages.
Still, resource-driven areas like Alberta have been debunking the trend in recent years as those in the oil fields pull in six-figure incomes, University of Western Ontario sociology professor Wolfgang Lehmann cautioned.
In fact, the latest census data shows median salaries for full-time managers in the oil and gas sectors soared more than 33 percent to more than $97,000 between 2000 and 2005—the fastest increase of all occupations.
Meanwhile, supervisors in the mining, oil, and gas sectors saw earnings rise 17.5 percent while mine service workers and those in oil and gas drilling saw their salaries rise by nearly 16 percent.
Lehmann suggested skilled trades people, including plumbers, electricians, welders, and carpenters, also are in high demand right across the country and can stand to make very comfortable incomes.
These areas historically were filled by skilled European immigrants, Lehmann said, noting both today’s immigrant and Canadian-born populations have gravitated more towards academic fields rather than skilled trades.
Armed with a sociology degree from Carleton University, Emily Fudakowski found herself unable to break out of the bar business and headed to Korea to teach English for a year.
Since returning to Ottawa four months ago, the 30-year-old has been searching for meaningful, higher-paying employment.
Broke and living once again with her parents, Fudakowski laments her situation is far different from that experienced by her mother and father.
By the time her parents were her age, they owned a house in Manotick, Ont. and Fudakowski—the last of three daughters—had just been born. Her mother was working full-time as a nurse while her father was an air traffic controller.
“I don’t know how they did it,” she said. “Different time. Different skill sets.”
Whether young people can expect to trail their parents throughout their careers isn’t clear, said Morissette.
“Maybe they’ve accumulated less money and have lower wealth holdings, but given that they have a higher education, maybe their earnings will grow faster than those of a typical youth in the 1970s,” he suggested.
“Maybe when they reach the age of 40 or 45, maybe they will have caught up to the income levels of their predecessors to a large extent, but that remains to be seen,” he added.
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