Pay Equity Committee on May 2nd, 2016

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Okay.

We had Dr. Kathleen Lahey from Queen's University here. She had some great statistics on the difference in the gaps in Ontario and Quebec. We were talking about the legislation there. It showed that overall, for Quebec the wage gap was really 92¢ for women compared with one dollar for men. They had implemented legislation and a few things like that.

If I look at that and I compare it with what you've said, if we account for all the observable characteristics, the wage gap is at 90¢. That's consistent with what you're saying. Do I understand that the other 10% is made up of choices and other factors? Could you give us some examples of those?

[Marie Drolet]

That's what economists generally refer to as the unexplained component. Researchers in the field take the wage gap and they partition it into an explained component and an unexplained component. The explained component looks at gender differences in productivity-related characteristics, evaluated at the male pay structure. The unexplained component looks at the differences in the returns to those characteristics by men and women, evaluated at the female mean characteristics.

Those statistics also include other measures of skill that aren't captured perfectly in a particular study. For example, if we're missing work experience, and we know that work experience influences wages, it then gives us a different estimate of this unexplained component.

The questions related to the gender pay gap are often framed in such a way that it's what the hypothetical woman would earn if she were paid according to the male pay structure. We can use different comparative pay structures, and that will give us a different estimate of this unexplained component.

Depending on the variables used in the study, depending on the methodology used, you could have differences in unexplained components, different estimates. A lot of the studies do suggest that the unexplained component can run between 50% to 75% of the actual gender wage gap, so for lot of our models, if we had better data, the data that we're missing on what determines wages, we could do a better job in explaining the gender pay gap.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

But there's no interview data that could be Paretoed for women-related causes, such as why they've not been in the workforce as long, or anything like that?

[Marie Drolet]

Some of our data does ask questions like that. Again, it's often debatable whether you should include measures such as that in a gender wage gap study. Analyses that fully omit occupation and industry, let's say, tend to say that choice doesn't matter, or preferences don't matter, whereas analyses that include variables like that tend to undervalue any labour market constraints on wages. Oftentimes a lot of these analyses will have a model with these variables in and a model without the variables, and the reader can then decide what's what.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Very good. Thank you.

[The Chair, Liberal, Anita Vandenbeld]

Dan, you have one minute.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Thank you.

I want to thank the clerk specifically for bringing in StatsCan. I think the work they do is very valuable not only to Canadians but to this committee.

You've done a very good job of estimating. You've given us a number of different graphs here that explain that there are a number of different variations on how to define, how to explain.

To go back to something Ms. Dzerowicz mentioned, right now there is no way for StatsCan to break down provincial-specific information to quantify data for provinces that have what we've heard time and time again are proactive regimes versus those with reactive regimes. Is it possible to section out and compare the individual wage gaps in certain provinces?

[Alison Hale]

Definitely. We do have that information. I just wasn't aware of any studies.

For instance, we do have information on the wage gap by province. Quebec and Ontario were mentioned. In Quebec, for instance, between 1997 and 2015 the gender wage gap was 84%, and in 1997 it went up to 91%. In Ontario it went from 81% to 86%. That's just purely looking at hourly earnings. In Canada, by comparison, it was from 81% to 85% over that same period.

[The Chair, Liberal, Anita Vandenbeld]

That's the time for that question.

We'll now move on to Ms. Benson. You have seven minutes.

[Sheri Benson, NDP, Saskatoon West, SK]

Thank you.

I appreciate the information.

There are just a couple of things I would like you to comment on. Is it the role of Statistics Canada to help departments figure out how to evaluate a policy and start to collect statistics, and advise departments on how best to do that?

I guess some of the challenge here is that there need to be some decisions on how we are going to measure consistently, over time, in order to be able to evaluate whether a policy is impacting the gender pay gap. From what I hear, you are saying that it is difficult because there are different ways people are measuring it and there isn't a consistent way we are saying, as a government or even as a department, what the best way is to go forward.

[Alison Hale]

As you know, Statistics Canada is not a policy department. Our role is to provide data that will help you to illuminate your discussion. When people come to us and they want to understand what is happening in the labour market, we just provide the data that would help them understand what is going on. It really depends on the questions you have. We'll provide the data that we feel would help you understand the question you have.

[Sheri Benson, NDP, Saskatoon West, SK]

One of the things you brought forward was that when you controlled for experience of men and women at the same age, and followed that cohort over a period of time, even though they would be in similar jobs and have the same level of experience, the pay gap didn't get any better with increased experience. The wage gap is persistent over time.

[Marie Drolet]

We do have statistics that show that the wage gap is persistent over time. I think what you are referring to more is why wages might not have diverged as much as workers aged over time. Is that correct?

[Sheri Benson, NDP, Saskatoon West, SK]

Yes.

[Marie Drolet]

You can look to a career path as two possible explanations. Traditionally, women have been viewed as having higher absenteeism and higher quit rates. More recent empirical evidence suggests that there is no gender difference in absenteeism and permanent quits, so the wage gap for a particular cohort may be stagnant or decline simply because those explanations are no longer used to account for women's lower wages for a particular cohort.

Another case in point would be women with children. As the children age, women are more able to devote themselves back to the labour force, so for a particular cohort, or birth cohort, the wage gap could be stagnant or decline because women's increased earnings will be reflected in their work effort.

Those are two reasons the wages are no longer diverging as workers age.

[Sheri Benson, NDP, Saskatoon West, SK]

Okay.

[Marie Drolet]

I am not sure if that answers your question.

[Sheri Benson, NDP, Saskatoon West, SK]

I think I understand.

[Marie Drolet]

Another way to look at things is that we know that the wage gap is small for young workers.

Young workers are new entrants into the labour market, and they have similar skills. The impact of career interruptions has yet to take place, so the wage gap is quite small. Older workers have a narrower range of occupational choices, for example, and career interruptions have taken place, but for that group we have seen the wages increase quite a bit between 1988 and 2008. That difference in the wage gap between older and younger workers is now a lot smaller. Following a birth cohort over time, we see that the wage gap at the beginning of a generation's life kind of follows them through.

[Sheri Benson, NDP, Saskatoon West, SK]

There is a point in which everyone is kind of the same, almost, and then as women's lives impact their work experience—whether that is having more unpaid work, having children, or the fact that women are in more precarious, lower-paid jobs—those things start to influence it and make the wage gap not get any better for women over time.

[Marie Drolet]

We do see that there is a family gap between women with children and women without children. Women with children earn less, even after controlling for work interruptions. Some estimates suggest that these earnings losses could be as large as $11,000 in the first year and maybe $8,000 in the second year. The break-even point is around seven years after a child is born. As you can see, we do have information about the impact of children on earnings.

We also have information on what happens when a woman delays having children until she is a little older. We know that at the beginning is when lifetime earnings grow very quickly. You accumulate more work experience and training, so depending on when you take time off to have children, it may have an impact on your wages, and that may carry through over time.

[Sheri Benson, NDP, Saskatoon West, SK]

Do you have any information about the impact over generations of the wage gap on the incidence of poverty and what we've lost from an economic point of view? Really, what is the impact beyond the individual—not beyond in that it's less, but economy-wide? What does the gap mean in societal terms as far as productivity and GDP go?

[Alison Hale]

We do know there that tends to be generational mobility. From one generation, then, the next generation tends to be economically more mobile, especially in certain populations, but I haven't seen a study looking specifically at what you're looking at.

[Sheri Benson, NDP, Saskatoon West, SK]

Thank you.

[The Chair, Liberal, Anita Vandenbeld]

We're now going to Mr. DeCourcey for seven minutes.