Post-Secondary Education, Training and Labour Prepared November 2018 2018 New Brunswick Minimum Wage Report
Contents Section 1 Minimum Wage Rates in New Brunswick... 2 1.1 Recent History of Minimum Wage in New Brunswick... 2 1.2 The Actual Minimum Wage Rate and the Inflation-Adjusted Minimum Wage Rate... 2 1.3 The Minimum Wage as a Proportion of Provincial Median Wage... 3 Section 2 Minimum Wage Earners in New Brunswick... 4 2.1 2017 Profile... 4 2.2 Ten Year Trends (2008 to 2017)... 5 Section 3 Canadian Comparisons... 7 3.1 Minimum Wage Rates in Canada... 7 3.2 Percentage of Employees Earning Minimum Wage... 8 Section 4 Cost of Living... 9 4.1 Consumer Price Index... 9 4.2 Consumer Price Index Growth Rate, 2007 to 2017... 9 4.3 Percentage Change in Total Consumer Price Index for Canada and Provinces, 2016 to 2017... 10 Section 5 Economic Conditions... 11 Page 1 of 11
The New Brunswick Minimum Wage Report provides basic information about changes to the provincial minimum wage rate, minimum wage earners, the cost of living and economic conditions in the province, as well as comparisons with other Canadian provinces and territories. Section 1 Minimum Wage Rates in New Brunswick 1.1 Recent History of Minimum Wage in New Brunswick The minimum wage rate in New Brunswick is currently set at $11.25 per hour. Over the last ten years, there have been ten changes to the minimum wage rate: Changes to Minimum Wage in New Brunswick Since 2009 Date of Change Minimum Hourly Wage Rate April 15, 2009 $ 8.00 September 1, 2009 $ 8.25 April 1, 2010 $ 8.50 September 1, 2010 $ 9.00 April 1, 2011 $ 9.50 April 1, 2012 $ 10.00 December 31, 2014 $ 10.30 April 1, 2016 $ 10.65 April 1, 2017 $ 11.00 April 1, 2018 $ 11.25 Source: ESDC Minimum Wage Database 1.2 The Actual Minimum Wage Rate and the Inflation-Adjusted Minimum Wage Rate The inflation-adjusted minimum wage rate represents the real value of the minimum wage rate over time in terms of purchasing power 1 in 2017 dollars. As shown in the graph on the following page, the inflation-adjusted minimum wage peaked in late 1976 at $11.74 per hour, followed by a sharp decrease to a low point of $6.97 per hour in 1989. Although the minimum wage rate increased during this time, it did not keep pace with inflation, resulting in reduced purchasing power for minimum wage earners. Over the next seventeen years, the purchasing power of minimum wage earners remained relatively low as the minimum wage rate kept pace with inflation, with the inflation-adjusted minimum wage staying below $8.00 per hour. In 2006, the minimum wage began to increase faster than inflation, with the adjusted rate rising to $10.71 per hour in 2014. In terms of purchasing power, the minimum wage rate in New Brunswick has not matched it s 1976 peak since that time. From around 2012 onward, increases to the minimum 1 Purchasing power refers to the value of money as determined by the quantity of goods and services that a person can afford to buy with it. Page 2 of 11
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 1974 1980 1986 1992 1998 2004 2010 2016 $ per hour wage rate have generally kept pace with inflation, resulting in stable purchasing power for minimum wage earners. $12 Actual Minimum Wage Rate Compared to the Inflation-Adjusted Minimum Wage (New Brunswick) $9 $6 $3 $0 Actual Minimum Wage Rate Inflation-Adjusted Minimum Wage (2017 Dollars) Sources: ESDC Minimum Wage Database and Statistics Canada, CANSIM Table 326-0021 1.3 The Minimum Wage as a Proportion of Provincial Median Wage Median wage is the midpoint hourly wage rate, where half of New Brunswick employees earn more and half earn less. The minimum wage expressed as a proportion of median wage is a measure used to understand how the minimum wage relates to all wages in the economy. As shown in the graph below, the minimum wage as a proportion of the provincial median wage increased from 2007 to 2012, before decreasing somewhat and then fluctuating around the same level from 2013 to 2018. 70% Minimum Wage as a Proportion of Median Wage (Monthly) January 1997 to October 2018 (New Brunswick) 60% 50% 40% Sources: ESDC Minimum Wage Database and Statistics Canada, CANSIM Table 282-0071 In 2017, New Brunswick had the second highest minimum wage as a share of median wage among Canadian provinces, behind Prince Edward Island. This was largely the result of wages in the province being low in comparison to those of the other provinces; in 2017, New Brunswick had the second lowest median hourly wage, behind Prince Edward Island. Page 3 of 11
In October 2018, the minimum wage as a percentage of the median wage in New Brunswick was higher for certain groups. A significant portion of employees in the following groups are likely earning a wage that is close to, or equal to, the minimum wage: 87% for youth aged 15-24; 58% for women (compared to 56% for men); and 87% for part-time employees compared to 55% for full-time employees. Section 2 Minimum Wage Earners in New Brunswick 2.1 2017 Profile In 2017, there were 22,500 minimum wage earners in New Brunswick. This represented 7% of all employees in the province. Youth (ages 15 to 24) were the most likely group to be earning minimum wage, with nearly one-third (31%) of New Brunswick youth earning the minimum wage in 2017 (25% nationally). In contrast, only 3% of core working-age (ages 25 to 54) employees and 4% of employees 55 years of age or older earned minimum wage in 2017. Given the relatively high percentage of youth that were earning minimum wage (both within New Brunswick and across the country), it is not surprising that very few minimum wage earners in the province live alone. Of the 22,500 minimum wage earners in the province in 2017, 55% (12,400) lived with parents (half of this group was enrolled in school), 26% (5,900) lived with a spouse or common-law partner, 6% (1,300) lived with a child or children with no spouse or common-law partner present, 5% (1,200) lived with non-relatives, and the remaining 5% (1,200) were lived alone. Of the 5,900 minimum wage earners who lived with a spouse or common-law partner, 9% (500) had a spouse or partner that was also a minimum wage earner, 51% (3,000) had a spouse or partner that was earning greater than minimum wage, 7% (400) had a spouse or partner that was self-employed (and thus wage data was not collected for), and the remaining 32% (1,900) had a spouse or partner that was not employed (the majority of whom were 55 years of age or older). Beyond earning less per hour, income among minimum wage earners was further limited by the number of hours they worked. In 2017, employees earning minimum wage worked an average of 26 hours per week. This is compared to an average of 37 hours per week for all employees. The gap in work hours is largely the result of job type, since there is a higher proportion of part-time employment at the minimum wage rate compared to total employment. Page 4 of 11
The dominant groups of minimum wage earners in the province are teenagers or young adults, women, part-time employees, permanent employees, non-unionized employees and those who had a high school diploma or less: 37% were between the ages of 15 and 19, with another 23% between the ages of 20 and 24. 57% were female. 55% worked part-time. 96% were not unionized. 64% were permanently employed. 52% had more than 12 months or more of job tenure. 32% had not completed high school (or equivalent). 41% had completed high school but had no post-secondary education credential. 27% had completed a post-secondary education program. 73% worked in sales or service occupations. 35% worked in the retail trade industry. 27% worked in the accommodation and food services industry. 2.2 Ten Year Trends (2008 to 2017) Changes in the Distribution of Subgroups of Minimum Wage Earners (New Brunswick, 2008 to 2017) Subgroups Age Groups: Percentage of Minimum Wage Earners in 2008 Percentage of Minimum Wage Earners in 2017 Difference Age 15 to 19 50.9% 37.2% -13.7 (% pts) Age 20 to 24 14.5% 23.0% +8.5 (% pts) Age 25 to 54 26.4% 26.5% +0.1 (% pts) Age 55+ 8.2% 13.3% +5.1 (% pts) Gender: Male 41.4% 42.9% +1.5 (% pts) Female 58.6% 57.1% -1.5 (% pts) Employment Type: Full-time 42.7% 45.3% +2.6 (% pts) Part-time 57.3% 54.7% -2.6 (% pts) Job Permanency: Permanent 68.4% 64.4% -4.0 (% pts) Temporary 31.6% 35.6% +4.0 (% pts) Union Coverage: Unionized 3.8% 4.4% +0.6 (% pts) Not Unionized 96.2% 95.6% -0.6 (% pts) Page 5 of 11
Subgroups Job Tenure: Percentage of Minimum Wage Earners in 2008 Percentage of Minimum Wage Earners in 2017 Difference Less than 1 Year 49.7% 47.6% -2.1 (% pts) 1 to 5 Years 37.6% 37.8% +0.2 (% pts) Over 5 Years 12.7% 14.7% +2.0 (% pts) Education Level 2 : Less than High School 47.4% 32.0% -15.4 (% pts) High School Diploma 34.6% 41.3% +6.7 (% pts) Post-Secondary Credential 17.9% 26.7% +8.8 (% pts) Occupation: Sales & Service Workers 73.2% 72.9% -0.3 (% pts) Source: Labour Force Survey, Special Data Purchase Over the past ten years, the proportion of minimum wage earners with the following characteristics increased: Young adults (ages 20-24); Older workers (ages 55+); Full-time employees; Temporary employees; Employees with job tenure of over 5 years; Employees with a high school diploma; Employees with a post-secondary education credential. Over the same period, the proportion of minimum wage earners with the following characteristics decreased: Teenagers; Part-time employees; Permanent employees; Employees with less than one year of job tenure; and, Employees with less than a high school diploma. 2 Based on Labour Force Survey definitions where the education level is the highest level of education completed. Page 6 of 11
Section 3 Canadian Comparisons 3.1 Minimum Wage Rates in Canada As of November 1, 2018, New Brunswick had the eighth highest minimum wage rate across Canada and represented the mid-point among the provinces. Minimum Wage by Province as of November 1, 2018 Jurisdiction Minimum Wages as of November 1, 2018 Alberta $ 15.00 Ontario $ 14.00 Northwest Territories $ 13.46 Nunavut $ 13.00 British Columbia $ 12.65 Quebec $ 12.00 Prince Edward Island $ 11.55 Yukon $ 11.51 Manitoba $ 11.35 New Brunswick $ 11.25 Newfoundland and Labrador $ 11.15 Saskatchewan $ 11.06 Nova Scotia $ 11.00 Source: ESDC Minimum Wage Database $15.00 New Brunswick Minimum Wage (Annual, Year-end) Compared to Highest and Lowest Minimum Wages of the Provinces $12.50 $10.00 $7.50 $5.00 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Lowest MW Highest MW NB MW Note: Territories were excluded as the higher cost of living associated with living in these areas typically leads to higher minimum wages. 2018 increases that have been announced were included in this chart. Page 7 of 11
3.2 Percentage of Employees Earning Minimum Wage In 2017, most provinces had between 6% and 8% of employees earning minimum wage. New Brunswick s share of minimum wage employees was on par with the average in Atlantic Canada. Prince Edward Island had the highest share of employees earning minimum wage (8.5%) and Saskatchewan had a much lower percentage of employees earning minimum wage than the other provinces (2.9%). Percentage of Employees Earning Minimum Wage (2017) 6.5% 6.9% 8.5% 7.2% 7.2% 7.4% 6.4% 6.2% 2.9% 6.2% 5.1% Canada NL PE NS NB QC ON MB SK AB BC Source: Labour Force Survey, Special Data Purchase While at a national level the percentage of employees earning minimum wage has remained relatively constant over the past several years, this percentage has been slightly more volatile within New Brunswick. After peaking in 2012 (following a series of six increases between 2009 and 2012), the percentage of New Brunswick employees earning minimum wage decreased in three consecutive years (during which time, the minimum wage in the province was only increased once, by $0.30 per hour). Since this time, the percentage of New Brunswickers earning minimum wage has increased, reaching 7.2% in 2017. This coincides with small, inflationary increases to the minimum wage rate in recent years. Percentage of Employees Earning Minimum Wage for Selected Province (2012 to 2017) Geography 2012 2013 2014 2015 2016 2017 Canada 7.2% 6.9% 7.2% 7.1% 6.9% 6.5% Atlantic Canada 9.0% 6.8% 6.0% 6.5% 6.6% 7.2% New Brunswick 9.7% 8.0% 6.7% 6.0% 6.6% 7.2% Ontario 9.6% 9.3% 10.9% 10.6% 9.2% 7.4% Alberta 1.9% 1.8% 1.9% 2.7% 4.5% 6.2% Source: Labour Force Survey, Special Data Purchase Alberta, which has historically had one of the lowest shares of employees earning minimum wage, has seen their share of minimum wage earners rise over the past few years as their minimum wage rate has increased significantly. The share of minimum wage employees in Ontario has decreased over the past few years, despite small inflationary increases made during that time. Ontario has historically had among the highest share of minimum wage employees in Canada. The share of minimum wage employees in Ontario will likely be impacted by the 2018 increase to $14.00 per hour. Page 8 of 11
Section 4 Cost of Living 4.1 Consumer Price Index The Consumer Price Index (CPI) is a measure of inflation from the perspective of a typical Canadian consumer. It is calculated by averaging the changes in the price of a fixed basket of consumer goods and services, each of which is weighted according to consumer spending patterns. Basket weights are updated every two years based on Statistics Canada s Survey of Household Spending. As shown in the table below, the price of consumer goods and services in New Brunswick increased by 2.3% between 2016 and 2017. The category of consumer spending that increased the most was alcoholic beverages and tobacco products, which increased in price by 9.0%. Beyond this, there were moderate increases to the costs associated with transportation (+4.6%) and recreation, education and reading (+3.8%), along with modest increases to the costs associated with household operations, furnishings and equipment (+1.2%); health and personal care (+2.1%); shelter (+2.2%); and clothing and footwear (+2.6%). The price of food declined slightly during this period (-1.3%). Change in CPI by Product Group (New Brunswick, 2016 to 2017) New Brunswick Total CPI and Product Groups Percentage Change from 2016 to 2017 Basket Weights in 2015 All-items +2.3% 100.0% Food -1.3% 16.1% Shelter +2.2% 22.3% Household operations, furnishings and equipment +1.2% 14.6% Clothing and footwear +2.6% 5.3% Transportation +4.6% 22.8% Health and personal care +2.1% 5.0% Recreation, education and reading +3.8% 11.1% Alcoholic beverages and tobacco products +9.0% 2.8% Sources: Statistics Canada, CANSIM Table 326-0021 and 326-0031 4.2 Consumer Price Index Growth Rate, 2007 to 2017 Over time, CPI growth in New Brunswick has been similar to the rest of Canada. During the 2008-2009 recession, there was only a slight increase in the cost of consumer goods and services. Between 2007-2008 and 2016-2017, there were four years where CPI growth in New Brunswick was above 2% but the growth in CPI for the majority of the past decade was below 2% per year. Page 9 of 11
CPI Growth for Selected Geographies (2007/08 to 2016/17) Geography 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 Canada +2.3% +0.3% +1.8% +2.9% +1.5% +0.9% +2.0% +1.1% +1.4% +1.6% Atl. Canada 3 +2.6% +0.1% +2.2% +3.6% +1.9% +1.2% +1.7% +0.4% +1.9% +1.8% NB +1.7% +0.3% +2.1% +3.5% +1.7% +0.8% +1.5% +0.5% +2.2% +2.3% Source: Statistics Canada, CANSIM Table 326-0021 4.3 Percentage Change in Total Consumer Price Index for Canada and Provinces, 2016 to 2017 Canadians paid 1.6% more for consumer goods and services in 2017 than they did in 2016, which is roughly two-thirds the increase seen in New Brunswick of 2.3%. All ten provinces experienced an increase in the costs of consumer goods and services. New Brunswick has not experienced negative CPI change over the past 30 years. Percentage Change in Total CPI for Canada and Provinces, 2016 to 2017 +1.6% +2.4% +1.8% +1.1% +2.3% +1.0% +1.7% +1.6% +1.7% +1.6% +2.1% Canada NL PE NS NB QC ON MB SK AB BC Source: Statistics Canada, CANSIM Table 326-0021 3 CPI for Atlantic Canada was calculated as the weighted average of the CPI values of the four individual provinces, based on population. Page 10 of 11
Section 5 Economic Conditions Following the beginning of the recession in 2008-2009, both Canada and New Brunswick saw a year-overyear reduction in real Gross Domestic Product (GDP) 4. Today, nearly ten years later, the impact of the recession continues to be felt by the provincial economy. Since 2009-2010, New Brunswick s real GDP growth has trailed the national average every year with the exception of 2014-2015. Furthermore, employment in the province has decreased in seven of the past nine years. Between 2008 and 2013, New Brunswick s unemployment rate increased from 8.5% to 10.3%. Since 2013, the province s unemployment rate has decreased steadily, although decreases in employment during this time suggest that this was largely due to individuals leaving the labour force, rather than the result of job creation. In 2017, the unemployment rate in New Brunswick was 8.1%. Real GDP Growth for Selected Geographies (2007/08 to 2016/17) Geography 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 Canada +1.0% -2.9% +3.1% +3.1% +1.7% +2.5% +2.9% +1.0% +1.4% +3.0% Atl. Canada +0.5% -3.3% +3.2% +1.2% -1.9% +1.4% +0.2% +0.8% +1.3% +1.8% NB +0.8% -1.4% +2.0% +0.3% -1.1% -0.3% +0.1% +2.4% +1.2% +1.9% Note: 2017 real GDP data is preliminary and is subject to change Sources: Statistics Canada, CANSIM Table 384-0038, 379-0030 and 380-0064 Employment Growth for Selected Geographies (2007/08 to 2016/17) Geography 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 Canada +1.4% -1.7% +1.4% +1.5% +1.3% +1.5% +0.6% +0.8% +0.7% +1.9% Atl. Canada +1.1% -0.9% +0.8% +0.9% +1.1% -0.1% -0.9% -0.4% -0.7% -0.2% NB +0.9% -0.2% -0.5% -0.7% -0.7% +0.4% -0.2% -0.6% -0.1% +0.4% Source: Statistics Canada, CANSIM Table 282-0002 Unemployment Rate for Selected Geographies (2008 to 2017) Geography 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Canada 6.1% 8.3% 8.1% 7.5% 7.3% 7.1% 6.9% 6.9% 7.0% 6.3% Atl. Canada 9.3% 10.5% 10.7% 10.1% 10.3% 10.2% 10.0% 10.0% 10.0% 9.7% NB 8.5% 8.7% 9.2% 9.5% 10.2% 10.3% 9.9% 9.8% 9.5% 8.1% Source: Statistics Canada, CANSIM Table 282-0002 4 GDP is the total value of goods and services in the economy. Increases and decreases over time indicate expansion and contraction of the economy. Real GDP adjusts for inflation. Page 11 of 11