The severity of the Wage Gap in Canada by Occupation

Updated: May 28

Because Google Adsense deemed this website to have too little content for ads, I'll be posting my top 25 undergraduate papers. This was the term paper for the labour economics class. It was to be done in a more scientific form rather than the arts form that most of my papers took. I was really looking forward to analyzing the wage gap by occupation. Obviously it varies but if we study which occupations have it worst and which ones have it best we can see patterns and draw policy conclusions.


Dalhousie University

ECON 3315

December 7th, 2020




Objective


The wage gap is still persistent in Canada to this day. So much so that in 2018, Canada adopted the Pay Equity Act with the goal to establish a practice pay equity regime within the federal public and private sectors.(1) However, not all areas of employment should be looked upon equally as it pertains to their contribution to the wage gap as a whole. The purpose of this paper is to find which classifications of occupations in Canada perform the worst on the metric of the wage gap using data from Statistics Canada and to find potential reasons as to why.


Background/Motivation


Economics is the often described as the study of satisfying unlimited human desires with scarce resources. Put more concisely, it can be considered the study or the science of efficiency. Combating the wage gap, as with any other policy-focused action, requires time and resources. If we allocate time and resources to combatting the wage gap in occupations where the wage gap does not or barely exists, that will be an effective waste of the resources. Therefore, it is important that if we intend on fighting the wage gap, we must know which specific occupations need the resources devoted to them the most and which specific occupations need the resources devoted to them the least.


Review of Literature


Digging into peer reviewed literature surrounding the wage gap in Canada only confirms the prior that the wage gap in Canada exists and that it varies more between occupations than within occupations.(2) Further research shows that an underrated factor is the disproportionate amount of males in the category of top earners.(3) Legislation addressing the gender pay gap has gotten better with time as lawmakers fix mistakes made in previous forms of legislation.(4) If gender distribution of occupations, female education and unionization are the prime factors of the gender pay gap in Canada, it stands to reason that legislation can indeed make an impact towards lowering the gender pay gap in all occupations. Although to some, the legislative efforts are perceived as useless.

Some claim that maternity leave is a large or the only explainer necessary of the gender pay gap.(5) And by proxy, that job tenure is a large explainer because those who take maternity leave are going to have a lower job tenure than their male counterparts by default. If that is the case, we should not expect to see large variations in the wage gaps across different occupations. And for that argument to remain as solid as its users think it is, we would also expect to see close to equal variation in the fertility of women across those occupations. There does not appear to be any peer reviewed literature examining the differences in fertility rates across occupations in Canada. Therefore, until there exists evidence that fertility varies widely across occupations, the argument of maternity leave as a sole explainer for the gender pay gap should be met with a healthy skepticism. In Canada, the reduction in the wage gap between 1998 and 2018 was mostly explained by changes in the gender distribution across occupations, the increased education of women and the declined share of men in unionized employment. In fact, job tenure and children only explain about 7% of the narrowing of the wage gap in Canada from 1998 to 2018.(6)

Historically, reductions in the wage gap can be attributed especially to the gender distribution of occupations and female education. However, that does not imply that both factors are of equal importance in terms of combatting the wage gap moving forward. If increases in women’s education is of more importance moving forward, we should expect to see occupations that require advanced degrees appearing as the occupations with the worst wage gaps. If gender distribution in the occupation is of more importance moving forward, we should expect to see occupations which are male dominant, or at least historically male dominant appearing as the occupations with the worst wage gap. There is a potential other factor that is often mentioned in the dialogue of the wage gap and that is sexism in the workplace. One way we can expect this to materialize in an effect on a measurable wage gap is whether or not women receive promotions at the same rate of men. If this is a significant factor moving forward in combatting the wage gap, we should expect to see occupations with clear promotional hierarchies as occupations with the worst wage gaps.


Hypotheses


Hypothesis 1: The occupations with the worst wage gaps are those with clear promotional hierarchies. Therefore we can assume there is a significant degree of sexism in the process of the promoting that is leading to the overall wage gap.

Hypothesis 2: The occupations with the worst wage gaps are those that are heavily dominated by men, especially traditionally. Therefore we can assume that one of the most important factors in fighting the wage gap is to promote a close to 50/50 split of men and women in the workforce of that occupation.

Hypothesis 3: The occupations with the worst wage gaps are those that require advanced education which are (at the very least) historically dominated by men. Therefore we can assume that one of the most important factors in fighting the wage gap is to promote the inclusion of more women in those specific fields of advanced education.


Analysis


Table 1 shows the average hourly wage rate by occupation in Canada for the year 2019. If we divide the female rate by the male rate, we can determine which occupations perform the worst and best on the metric of the wage gap. The desired female to male wage rate ratio is 1.00 and the further below 1.00, the worst the occupation performs on the metric of the wage gap. The data patterns seen in table 1 show that there are large variations in exactly which occupations still perform poorly on the metric of the wage gap. According to Statistics Canada, in the aggregate for all jobs in 2018, women earned 87 cents for every dollar earned by men.(7) Which is confirmed by the average female to male hourly wage rate ratio in table 1 for all occupations being 0.88. All figures below the average are bolded. The lowest four occupations listed occupations are “middle management occupations in retail and wholesale trade and customer services”, “care providers and educational, legal and public protection support occupations”, “natural resources, agriculture and related production occupations, as well as “occupations in manufacturing and utilities.” They all have a female to male ratio of less than 0.77. Some of these occupations can be described as being occupations with clear promotional hierarchies, such as in the case of management. And some can also be described as being occupations that are traditionally heavily male dominant, such as in the case of national resources production.(8) Only one of those occupations require an advanced degree, which is a law degree. However, law is not an occupation that is particularly male dominant in Canada.(9) Therefore, this data is consistent with the first two hypotheses, but not the third.

Some of the occupations that perform the best on the metric of the wage gap are “office support occupations”, “distribution, tracking and scheduling co-ordination occupation”, “professional occupations in nursing”, “professional occupations in health (except nursing)”, “assisting occupations in support of health services” and “occupations in front-line public protection services.” Nursing may be infamous for being a more historically female occupation, however, the female to male ratio in that industry is exactly 1.00. Therefore, it is clear that the wage gap effect is a one-way street. In fact, physicians in Canada in the year 2018 comprised of a 54% to 46%(10) gender split for males and it has a female to male wage rate ratio of almost 1.00. And thus, an occupation does not need to be female dominant in order for the gender wage rate ratio to be equal.


Conclusions


The occupations with the worst wage gaps are those with a clear promotional hierarchy as well as those which have been historically male dominant. Therefore the evidence from the data of the year 2019 is consistent with both the first and the second hypothesis. In the CANSIM data we see that the occupations with the worst wage gaps are “middle management occupations in retail and wholesale trade and customer services”, “care providers and educational, legal and public protection support occupations”, “natural resources, agriculture and related production occupations, as well as “occupations in manufacturing and utilities.” Some can be described as having clear promotional hierarchies, such as management. While others can be described as being male dominant occupations, especially traditionally, such as natural resources productions and manufacturing & utilities. None of the occupations which perform the worst on the metric of the wage gap can be described as occupations that require advanced degrees which are male dominated. And thus, the evidence shows that the time and resources devoted to combatting the wage gap in Canada should be focused on eliminating the role of sexism in the process of promotions and encouraging a greater share of women in heavily historically male dominated occupations.

Some of the occupations with the best female to male wage rate ratio are those which are female dominant or are about equal in their gender distribution, such as nursing and physicians. Further research will be needed in the future on which occupations continue to perform worse than others on the metric of the wage gap and which occupations make the boldest strives to reach the 1.00 female to male hourly wage rate ratio in Canada.




Bibliography


L. (2020, October 01). Consolidated federal laws of canada, Pay Equity Act. Retrieved October 14, 2020, from https://laws-lois.justice.gc.ca/eng/acts/P-4.2/page-1.html


Drolet, Marie, and Karen Mumford. "The Gender Pay Gap for Private‐Sector Employees in Canada and Britain." British Journal of Industrial Relations 50, no. 3 (2012): 529-53.


Fortin, Nicole M. "Increasing Earnings Inequality and the Gender Pay Gap in Canada: Prospects for Convergence." Canadian Journal of Economics/Revue Canadienne D'économique 52, no. 2 (2019): 407-40.


Mcdonald, Judith Ann, and Robert Thornton. "Have Pay Equity Laws in Canada Helped Women? A Synthetic-Control Approach." The American Review of Canadian Studies 46, no. 4 (2016): 452-73.


Sommers, C., & Feminist, T. (2017, May 17). The Gender Wage Gap Myth and 5 Other Feminist Fantasies. Retrieved October 14, 2020, from https://time.com/3222543/wage-pay-gap-myth-feminism/


Pelletier, R., Patterson, M., & Moyser, M. (2019). The gender wage gap in Canada: 1998 to 2018. Statistics Canada.


Statistics Canada. Table 14-10-0340-01 Employee wages by occupation, annual. https://doi.org/10.25318/1410006401-eng. Ottawa, Ont., 2020 [accessed October 14, 2020]. Available from: https://www150.statcan.gc.ca/t1/tbl1/en/cv.action?pid=1410006401.


Statistics Canada; Natural Resources Canada (10 Key Facts on Canada’s Natural Resources; Key Facts and Figures Supporting Gender-Based Analysis at NRCan; Women in Science and Technology at NRCan (presentation)); Maclean’s, June 2015; Osler, Hoskin & Harcourt, 2016 Diversity Disclosure Practices.


Federation of Law Societies of Canada, “Membership,” 2016 Statistical Report of the Federation of Law Societies of Canada (2016).


CMA Masterfile, January 2018, Canadian Medical Association.





1 - L. (2020, October 01). Consolidated federal laws of Canada, Pay Equity Act.

2 - Drolet, Marie, and Karen Mumford. "The Gender Pay Gap for Private‐Sector Employees in Canada and Britain.” 2012.

3 - Fortin, Nicole M. "Increasing Earnings Inequality and the Gender Pay Gap in Canada: Prospects for Convergence.” 2019.

4 - Mcdonald, Judith Ann, and Robert Thornton. "Have Pay Equity Laws in Canada Helped Women? A Synthetic-Control Approach.” 2016.

5 - Sommers, C., & Feminist, T. (2017, May 17). The Gender Wage Gap Myth and 5 Other Feminist Fantasies.

6 - Pelletier, R., Patterson, M., & Moyser, M. (2019). The gender wage gap in Canada: 1998 to 2018. Statistics Canada.

7 - Pelletier, R., Patterson, M., & Moyser, M. The gender wage gap in Canada: 1998 to 2018.

8 - Statistics Canada; Natural Resources Canada (10 Key Facts on Canada’s Natural Resources; Key Facts and Figures Supporting Gender-Based Analysis at NRCan; Women in Science and Technology at NRCan (presentation)); Maclean’s, June 2015; Osler, Hoskin & Harcourt, 2016 Diversity Disclosure Practices.

9 - Federation of Law Societies of Canada, “Membership,” 2016 Statistical Report of the Federation of Law Societies of Canada (2016).

10 - CMA Masterfile, January 2018, Canadian Medical Association.