Labour Market Matters - May 2014

Between 1970 and 2005, the share of total earnings in the Canadian labour market going to middle-class workers has fallen significantly, while the earnings share of higher-earnings workers has risen. Is the middle-class being hollowed out? A paper by CLSRN affiliate Charles Beach (Queen’s University) entitled “What has Happened to Middle-Class Earnings? Distributional Shifts in Earnings in Canada, 1970-2005†(CLSRN Working Paper no. 131), finds that, while there has been a large drop in the proportion of workers making middle-class earnings, there has correspondingly been an increase in the proportion of workers earning higher and lower-end earnings. The study finds that there has been a drop in the number of middle-class earners in the Canadian labour market. In the United States, a marked pattern of “job polarization†– or the share of employment accounted for by high-skill and low skill jobs growing faster than the employment share accounted for by middle-skill jobs - has led to concern over the disappearance of the middle-class. Given the high degree of economic interconnectivity between Canada and the United States, it seems reasonable to ask whether job polarization is also occurring north of the border. A study by CLSRN affiliates David Green (University of British Columbia) and Benjamin Sand (York University) entitled “Has the Canadian Labour Market Polarized?†(CLSRN Working Paper no. 133) analyses movements in wage inequality, and employment and wage polarization across occupations in Canada for the last four decades. The authors find that Canada has also experienced faster growth in employment in both high and low paying occupations relative to those in the middle since 1981 but, in contrast to what occurred in the U.S. in the 1990s, wage rates did not exhibit polarization.