Thank you for the opportunity to appear before you. I am currently an associate professor of economics at Wilfrid Laurier University. I specialize in labour economics with a focus on issues related to public policy, gender, and retirement.
Broadly speaking, I believe the economic security of women has improved substantially over the past 50 years. I suggest this is largely due to women's increased participation in the paid-labour market, providing women with earnings, pensions, and other income that is independent of the decisions of their spouse.
In my short time I would like to bring three items to the committee's attention. First, I will suggest improvements to the working incoming tax benefit that would promote greater independence of women in their career decisions. Second, I will suggest a general review of income-tested benefits available to older women. Third, I will highlight my current work on gender wage gaps, demonstrating that the wage premium enjoyed in male-dominated occupations does not simply reflect greater skills being used in those male-dominated occupations.
First, I will discuss the working income tax benefit, or WITB. The WITB is a non-refundable tax credit that offers a wage subsidy to some individuals with low annual earnings. The current program offers a 25% wage subsidy, which will increase to 26% in 2019. The wage subsidy increases the effective wage rate, and evidence suggests this will push low-wage workers to increase how much they work in a year. As such, the WITB can work to promote attachment to paid work and lead to greater economic security in the future.
However, there are two problems with the WITB. First, for married women, eligibility depends on a couple's income. In practice, this means a low-wage woman's effective wage rate depends on the decisions of her spouse. In general, it is suggested that, in the interest of promoting and supporting gender equity, policies affecting labour market incentives should focus on the individual unit when assessing income rather than on the family.
Second, in cases where both spouses are low earners, only one member of the couple can apply for the WITB. This means a woman must negotiate with her spouse to be eligible for the subsidy. Again, this implies a low-wage woman's effective wage rate depends on the decisions of her spouse.
For these reasons, I suggest that section 122.7 of the Income Tax Act be amended to make the WITB eligibility depend on individuals', rather than couples', circumstances.
I will now now discuss income-tested benefits available to older individuals. Canada's retirement income system was largely designed in the 1960s and 1970s. Many of its characteristics reflect how families organized themselves at that time. The system needs updating to better reflect current and future family structure. As an example, I would like to highlight the availability of the allowance under part III of the Old Age Security Act. In cases where a spouse of a pensioner is aged 60 to 64 or a widow is aged 60 to 64, an income supplement or allowance is available. This policy recognized that most women are younger than their husbands, and there is limited attachment to the labour market among older generations.
However, there are no similar benefits available to low-income women aged 60 to 64 who are divorced or simply never married. As a broad statement, I believe it would be useful to undertake a serious review of the various policies supporting older Canadians embedded in our tax system and the retirement income system. There are many opportunities to better target those most in need, make the system more transparent to taxpayers, and update the system to better meet the needs of current and future generations of women.
Finally, I want to highlight some of the gender wage gap research I have under way. As you know, women earn a lower hourly wage on average than men. Economists spend a lot of time trying to break apart that difference and understand what drives it. One thing is clear: occupational segregation drives a large part of that wage gap.
We question whether the wage premium enjoyed in male-dominated occupations seems justified, in the sense that some jobs require more skill, and employers would reasonably pay higher wages for high-skills jobs. We separately examined industries to recognize that different industries require and value different skills. Our results provide clear evidence that the male wage premium is not universally justified. There are a handful of industries in which the wage premium seems justified as paying higher wages for higher skills. However, in many industries the part of the wage gap explained by occupational segregation does not represent a gender gap in skills. It is simply a premium enjoyed in male-dominated occupations that, from our vantage point, cannot be explained.
As a work in progress, using Statistics Canada's confidential data in our research data centre, I'm not able at this time to present detailed results, but I can offer a copy of our report in March.
I suggest that the type of research we are doing could be used as an evidence base in the development of new pay equity policies applied at an industry level in the private sector. While largely under provincial jurisdiction, there are opportunities within the federal jurisdiction to advance pay equity in the private sector.
Thank you for your attention today. I am happy to answer any of your questions.