The typical minimum-wage earner in Canada—not who you think
Many Canadians believe raising the minimum wage will effectively help the working poor. Central to this belief is the assumption that the typical minimum-wage earner lives in poverty. But is this really the case—who is the typical minimum-wage earner in Canada?
We sought to answer this question in a recent Fraser Institute study, using data from Statistics Canada. The results may be surprising for minimum wage advocates. Specifically, we found that:
• 88 per cent of minimum-wage earners do not live in a low-income household, as measured by Statistics Canada’s low income cut-off (LICO).
• 83 per cent of workers living in a low-income household earn more than the minimum wage.
In other words, most Canadians who earn the minimum wage are not “poor,” and most of those living in “poor” households earn more than the minimum wage. For a government policy aimed at helping the working poor, the minimum wage simply does not efficiently or effectively target the people it is supposed to help.
To help explain these results, we looked at some of the other characteristics of minimum-wage earners including their age, education, and more. Here is what we found:
• 58 per cent of minimum-wage earners are teenagers or young adults aged 15 to 24, with the vast majority of them (85 per cent) living with their parents or other relatives. For many youths, a minimum wage job is their first while in school and often a stepping stone to higher paid employment.
• 54 per cent of minimum-wage earners have achieved a high school diploma or less, signalling very low levels of education. If we focus on all workers who hold a university degree, then only 3 per cent earn the minimum wage. This should put to rest the idea that a substantial share of university graduates is working minimum wage jobs.
• 58 per cent of minimum-wage earners work part-time. More broadly, however, part-time workers are much more likely than full-time workers to be earning minimum wage. Consider that just 4 per cent of all full-time workers earn the minimum wage, challenging the notion that a large cadre of full-time career workers is dependent on the minimum wage.
• 20 per cent of minimum-wage earners have an employed spouse, meaning there is more than one earner in the household. And the vast majority of their spouses earn more than the minimum wage.
• Just 2 per cent of minimum-wage earners are single parents with a young child, diffusing the misperception that minimum-wage earners are generally single parents struggling to survive.
The facts paint a surprising picture of the typical minimum-wage earner in Canada: a young person, usually living with parents or other relatives, while often in school and working a part-time job.
If the goal is to help the working poor, raising the minimum wage is at best a very crude method since it poorly targets those in need. At worse, can produce harmful economic consequences by reducing job opportunities for low skilled workers.
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