Canadian Women's Foundation: The Facts about the Gender Pay Gap

Originally posted by Canadian Women's Foundation.

What is the gender pay gap?

In general, the gender pay gap refers to the difference in average earnings of people based on gender. It is a widely recognized indicator of gender inequities, and it exists across industries and professional levels. There are different ways of measuring the gap, but no matter how you measure it, the gap still exists.

The gender pay gap is worse for those who face multiple barriers, including racialized women, Indigenous women, and women with disabilities. Though it differs by age group, the gap starts from a young age and carries into the senior years (Moyser, Statistics Canada, 2019).

Pay inequity is so important because earnings are a key determinant of economic well-being in Canada. It is also “symbolic of gender-based discrimination and injustice” (Moyser, Statistics Canada, 2019).

The UN’s Human Rights Committee (2015) has raised concerns about “persisting inequalities between women and men” in Canada, including the “high level of the pay gap” and its disproportionate effect on low-income women, racialized women, and Indigenous women.

The gender pay gap is directly connected to other economic-related gender gaps, including fields of study and work, career advancement opportunities, and time allotted to unpaid care and domestic work (OECD, 2012).

According to the OECD (2022), for full-time employees, there is a 16.1% difference between annual median earnings of women and men relative to the annual median earnings of men. In its ranking of countries, Canada has the eighth worst gender pay gap.

More Definitions

Statistics Canada (2019) notes that you can calculate the gender pay gap by comparing average annual earnings, comparing full-time and full-year average annual earnings, or hourly wages. The Ontario Equal Pay Coalition focuses on the average annual earnings because it addresses “the full picture of women’s economic inequality”.

The Institute for Gender and the Economy says: “most people think the wage gap comes from women being paid unequally for the same work, but this only accounts for a small portion of the gap … the bigger source of the gap comes from job segregation where women end up working in lower paid job categories or industry sectors.

Why is ending the gender pay gap so urgent?

  • It’s one of the root causes of gendered poverty. Women are more vulnerable to low income than men in Canada, partially due to the gender pay gap (Fox and Moyser, Statistics Canada, 2018).

  • It impacts all life stages. Girls 12 to 18 experience a summer job gender pay gap of almost $3.00 per hour (Girl Guides of Canada, 2018). Women post-secondary students leave school with student loans to pay and lesser means to do so (Canadian Women’s Foundation, 2019). And it contributes to a gendered pension gap of 22%, where women retire with only about 80% of the pension men retire with (Mercer CFA Institute, 2021).

  • It has implications on a global scale. When it comes to the gender gap in overall economic participation and opportunity, Canada ranks only 40 in the World Economic Forum’s (2021) listing of 156 countries.

Frequently Asked Questions About the Gender Pay Gap

What's the scope of the gender pay gap in Canada?

The gender pay gap can be measured in different ways. According to Statistics Canada (2022), as of 2021, the gender pay gap for full-time and part-time employees is 0.89, which means women make 89 cents of every dollar men make. The gender pay gap for full-time employees is 0.90, which means women make 90 cents of every dollar men make.

According to Statistics Canada (2021), as of 2019, the gender pay gap for annual wages, salaries, and commissions is 0.71, which means that on an annual basis, women make 71% of what men make.

The gender pay gap persists even though women now outnumber men in pursuing university degrees (Statistics Canada, 2021). Women who graduate university with a bachelor’s degree earn an average of $69,063 annually, while men who graduate with a bachelor’s degree earn $97,761 (Statistics Canada, 2016).

According to an ADP and Leger (2021) self-report survey, “women’s pre-tax salaries remain 21% lower than men’s, while additional variable compensation, such as bonuses, profit-sharing or equity agreements, are where disparity surges, with Canadian working women earning 43% less in additional compensation compared to men in 2020.”

More men (87%) are employed full-time than women (75.6%). Only 13% of men are employed part time, and 24.4% of women are employed part time (Statistics Canada, 2022). This could partially be a result of the fact that more of women’s time is taken up with unpaid work than men. Women spend an average of 3.6 hours or 15% of their day on unpaid domestic and care work compared to the average of 2.4 hours or 10% of the day that men that spend on unpaid work (Statistics Canada, 2019).

This disproportionate share of unpaid work is supported by evidence that “women have heighted perceptions of time pressure” – that is, both “awareness of not having enough time” and the “experience of hectic pace, harriedness, and rushing, accompanied by apprehension and frustration” (Moyser and Burlock, Statistics Canada, 2018).

Institute for Gender and the Economy (2019) says: “People looking to get ahead in their jobs must often work long hours, but the gendered allocation of family responsibilities prevents women from being able to do this. As a result, jobs requiring employees to work long hours produce some of the largest wage gaps.”

Men are also well represented in higher-paid sectors and jobs compared to women. Sixty-four per cent of management jobs are occupied by men, compared to the 35.6% occupied by women. And men are highly represented in trades, manufacturing, and natural and applied sciences, which tend to be well-compensated and more likely to benefit from union protections (Statistics Canada, 2022).

Women are concentrated in underpaid, precarious occupations involving the “5 Cs”: caring, clerical, catering, cashiering, and cleaning. “Many of the women working in these sectors are racialized, immigrant, migrant, and/or undocumented. They are concentrated in the lowest paying and most precarious of caring jobs” (Canadian Women’s Foundation, 2020).

Still, “wage gaps occur across all sectors and all education levels” (Lambert and McInturff, 2016). For example, women executives make about 56% less on average than men executives. The gap widens even further for racialized women, who make about 32% less than non-visible minority women (Longpré-Verret and Richards, Statistics Canada, 2021).

There has been a narrowing of the gender pay gap over time. In 2018, the largest factors explaining the gap were “the distribution of women and men across industries, and women’s overrepresentation in part-time work.” But nearly two-thirds of the gap was unexplained—for this portion, possible explanations include gender differences in work experience, “as well as unobservable factors, such as any gender-related biases” (Pelletier et al., Statistics Canada, 2018).

How is the gender pay gap different for groups?

Census 2016 data shows that:

  • Indigenous women working full-time, full year earn an average of 35% less than non-Indigenous men, or 65 cents to the dollar (Statistics Canada).

  • racialized women working full-time, full-year earn an average of 33% less than non-racialized men, or 67 cents to the dollar (Statistics Canada).

  • newcomer women working full-time, full-year earn an average of 29% less than non-newcomer men, or 71 cents to the dollar (Statistics Canada).

Also, according to this data, racialized women were paid less than white men, based on median wages, salaries, and commissions. All racialized women made 59.3% of what white men made, Black women made 58.5% of what white men made, South Asian women made 55.1% of what white men made, and Chinese women made 65.4% of what white men made (Catalyst, 2022).

Women with disabilities have lower incomes compared to women without disabilities and men with or without disabilities. “Among women aged 15 or older who worked mainly full-time in 2010, those with disabilities reported $37,070 of after-tax personal income, on average, which was $2,250 less than same-aged women without disabilities. Men with disabilities aged 15 or older who worked mainly full-time in 2010 reported $45,080 of personal income, on average” (Burlock, Statistics Canada, 2017).

Those who identify as LGBTQ2S+ also experience significant pay gaps in Canada. “The earnings gaps between sexual minorities and heterosexual men were substantial: heterosexual men were found to earn the most ($55,959), followed by gay men ($50,822), lesbian women ($44,740), bisexual men ($31,776), and bisexual women ($25,290)” (Social Research and Demonstration Corporation, 2021).

The Canadian Women’s Foundation (2020) found that only 27% of women and gender-diverse people report being paid equally to their peers. That number goes down to 16% for those with a physical disability, 23% for those with another type of disability, 25% for those who are racialized, 25% of those who are 2SLGBTQI+, and 25% for those aged 55 and older. Overall, 21% of women and gender-diverse people feel taken advantage of at work—25% for those who are Indigenous, 25% for those with a physical disability, 28% of those with another disability, 25% for those aged 18 to 34, and 34% for those who identify as 2SLGBTQI+.

If it's illegal to pay people differently based on gender, why does the gender pay gap exist?

Pay equity is often defined as “equal pay for work of equal value,” and Canada has had laws about it since the 1970s (Canadian Human Rights Commission).

Equitable pay-related legislation includes the Pay Equity Act, which applies to some federally-regulated employers and parliamentary institutions, the Employment Equity Act, the Canadian Human Rights Act, and various provincial and territorial human rights laws (Ontario Equal Pay Coalition). Most pay equity laws apply to the public sector (ADP).

And, in one of the most dramatic social changes over the last century, women’s participation in the labour market has increased significantly. For examples, in 2015, 82% of women ages 25 to 54 participated in the workforce, a big increase from 21.6% in 1950 and 65.2% in 1983 (Levanon et al., 2009).

But practices, structures, and cultural factors work together to maintain gendered pay gaps and unfairness in pay.

Traditional “women’s work” tends to pay less than traditional “men’s work.” Jobs seen as “women’s work” can be undervalued because they parallel domestic work women are expected to do for free (Ontario Equal Pay Coalition). Research shows that when women make up a large percentage of a specific industry, the wages they get paid tend to fall (Levanon et al., 2009). Women workers are also more likely to be employed in lower-wage occupations and lower-paid industries (Schirle and Sogaolu, 2020).

Another factor in the overall pay gap is that more women than men work part-time (Statistics Canada, 2022). Women work part-time for several reasons, including lack of affordable childcare and family leave policies, along with social pressure to carry the bulk of domestic responsibilities (Schirle and Sogaolu, 2020). About 44% of Canadian non-school aged children live in “childcare deserts”, which are areas where at least three children would be in potential competition for each licensed daycare space (Macdonald, Canadian Centre for Policy Alternatives, 2018).

These factors also make it more likely for women to have interruptions or absences from work, which are linked to fewer opportunities for promotions and salary increases. Twenty-two per cent of women who were away during the work week listed family responsibilities as the cause, compared with only 9.3% of men (Moyser, Statistics Canada, 2017).

Finally, in its 10-year analysis, Statistics Canada (2018) notes that nearly two-thirds of the studied gender pay gap is unexplained. For this portion, possible explanations include gender differences in work experience, “as well as unobservable factors, such as any gender-related biases.”

What's the impact of the gender pay gap?

According to an Ontario Government report, women with the same experience, socio-economic and demographic background earn approximately $7,200 less than their male counterparts per year (Gender Wage Gap Strategy Sterring Committee, 2015).

Overall, “a lifetime of pay inequality between women and men means that women are disproportionately retiring into financial insufficiency and even poverty” (Moyser, Statistics Canada, 2019).

And this, in combination with other gendered stressors, takes a personal toll. The risk of falling into poverty means that women are sometimes forced to stay in abusive relationships, despite the danger (Public Health Agency of Canada, 2012). When women work outside the home and do most of the domestic work, their health suffers. According to Statistics Canada (2020), women at every age are more likely than men to describe their days as “quite a bit” or “extremely” stressful.

Every year, the Ontario Equal Pay Coalition and gender justice organizations and advocates mark Equal Pay Day, which “symbolizes how far into the year the average woman must work in order to have earned what the average man had earned the entire previous year”. On average, women must work 15 and a half months to earn what a man does in 12 months.

Estimates vary, but the World Economic Forum (2021) has calculated that it will take 267.6 years to close the economic gender gap worldwide, if present trends continue.

What's the "motherhood penalty" and "fatherhood bonus"?

Research shows that women who have children generally pay a price when it comes to salary, while men may benefit from becoming fathers.

The majority of the gender pay gap worldwide opens up around the time of the birth of the first child. This is the case even in some of the world’s most equal societies, like Scandinavia (Kaplan, 2018).

Mothers with at least one child under age 18 earned 85 cents for every $1 earned by fathers, while women without children earned 90 cents for every dollar earned by men without children, based on 2015 data (Moyser, Statistics Canada, 2017).

A 2019 report found that the motherhood earnings gap persists for at least five years after women return to work following the birth of a child. The earnings gap is wider and lasts longer for women in the 25 to 29 age range than those who have children later. Men do not face similar penalties after becoming fathers—in fact, they tend to experience an increase in earnings. “Whether this is because employers see fathers as harder working or more committed than non-fathers is up for debate and further study, but the fact remains that career costs of parenthood are largely placed on women” (Agopsowicz, RBC Economics Research).

Fathers may also receive higher salaries than childless men, as found by a study of more than 18,000 men between 1999 and 2005. The study focused on white men due to pay gaps between racialized and white men (Fuller and Cooke, 2018).

The reality that women earn less after becoming parents is connected to job shifts for positions with more family-friendly hours and policies. But job shifting may only be an option only for mothers in middle- to upper-level positions. Women in low-paid, precarious work situations may face steeper barriers after becoming mothers as the same level of job flexibility is not available to them (Scoffield, 2019).

Even when children have grown up, mothers can continue to face earning penalties associated with caregiving for aging relatives. Given Canada’s rapidly aging population, this is another cause for concern (The Vanier Institute of the Family, 2017).

What is pay transparency?

In practice, pay transparency is “people being open about how much money they make for the work they do.” It can include being open about benefits and other factors such as parental leave, vacation days, and paid sick days (Djabarov, 2020).

In legislation, pay transparency “requires employers to disclose the wage structures in their workplaces, and helps to enforce existing human rights laws and promote gender equality” (Ontario Equal Pay Coalition). Canada has federal pay transparency legislation for federally regulated workplaces, and some provinces also have their own pay transparency legislation (Baker et al., Statistics Canada, 2019).

Pay transparency can be a useful tool to help close pay gaps. “When employers are open about their payscales and criteria for evaluating raises and promotions, employees can make informed decisions about whether they are being paid fairly and whether it is appropriate to negotiate for a higher salary or promotion. This is important for all women, who earn less than men in all but five occupations, but especially important for women of color, for whom the gender wage gap is magnified by a racial and ethnic earnings gap” (Institute for Women’s Policy Research, 2020).

In university and colleges, transparency laws can reduce the gender wage gap by 2.2 to 2.4 percentage points, particularly in unionized settings (Baker et al., Statistics Canada, 2019).

Nearly three-quarters of people in Canada—including 81% of women—say they would be comfortable with their salary being made public if it could reveal unfair discrepancies between men and women’s wages (McIntyre, 2018).

How can we end the gender pay gap?

“Narrowing the gender pay gap is not just about addressing inequality. Evidence shows that diverse organizations outperform their peers. It is also important from a talent perspective, as candidates may view it as a indicator of whether the employer has an inclusive culture that will provide a level playing field in terms of opportunity. The topic attracts significant investor interest, and regulation is also increasing, meaning this is both a brand and financial issue” (Baker McKenzie).

Catalyst (2021) notes that “both pay equity and increasing the representation of women in higher paying jobs need to be addressed to close the gap. While the gender pay gap and pay equity are related, they are not interchangeable. In other words, you can achieve pay equity, but unless you close the representation gap at all pay levels, you will continue to have a gender pay gap.”

Many measures in concert can help end the gender pay gap, including: enforced pay equity legislation across sectors and workplaces, increasing the minimum wage, and universal childcare (UFCW Canada).

Three bold steps that companies and government can take to help close the gender pay gap are: ongoing audits of compensation and gendered advancement opportunities; prioritization of workplace flexibility, especially for mothers and caregivers; and implementation of pay transparency policies (Canadian Women’s Foundation, 2019).

Original article can be found here.