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Time to End the Gender Pay Gap – Why It Matters

The gender wage gap is the difference in earnings between women and men in the workplace. It is a widely recognized indicator of women’s economic equality, and it exists to some extent in every country in the world. The most recent Statistics Canada data released January 2019, shows that the gender wage gap in Canada for 2017 was over 29%, calculated from median wage earnings for both sexes of workers. This means that for every $1.00 earned by a male worker, a female worker earns 71 cents.

Since 1977, the Canadian Human Rights Act has recognized pay equity as a right for employees in the federal jurisdiction under a complaint-based system (section 11). As a result, it does not require employers to actively examine their compensation practices; instead, the onus is placed on employees to bring complaints forward to redress instances of pay discrimination. The federal Govt has only just introduced legislation for a pay equity regime with federal Public and Private Sectors in October 2018!

The Ontario Pay Equity Act was passed in 1987, when the gender wage gap was about 36%, and it has been narrowing extremely slowly over time. But not fast enough. (8% in 30 years!)

The gender wage gap is typically measured in different ways:

  • The simplest way to measure the gender pay gap is: Average pay for men as a group, compared to average pay for women as a group. In this approach, the simple comparison of the average pay for the two groups, results in the unadjusted “gender pay gap” being represented as:

“Unadjusted” Gender Pay Gap = (Average Male Pay – Average Female Pay)/Average Male Pay

  • This definition drives the most commonly cited government statistic about the gender pay gap today. While this definition is simple, it can also be misleading. There may be valid reasons why average pay for men differs from women as a group. (men and women may work in different job roles inside companies – eg.: Men and Women may not be equally represented among administrative assistants versus software engineers – and those different pay scales might be causing the gap). So, a simple comparison between ALL women with ALL men doesn’t account for important differences like this. Thus, it is referred to as the “unadjusted” gender pay gap.
  • A more accurate way to look at the gender pay gap is to compare similarly situated male and female employees. Because many factors affect pay, we should try to separately measure them to understand how each impacts pay. In addition to gender, this comparison also accounts for differences in education, experience, type of job role and other factors that differ between men and women. The goal is to make a fair comparison between similar workers, to see what gender pay gap remains. This is what we call the “adjusted” gender pay gap.
  • Compare the annual earnings, by gender, for both full-time and part-time workers. On this basis, women workers in Canada earned an average of 69 cents for every dollar earned by men in 2016.3 This measurement results in the largest wage gap because more women work part-time, and part-time workers typically earn less than full-time workers. (Canadian Income Survey, Statistics Canada. Table 206-0053. “Distribution of employment income of individuals by sex and work activity, Canada, provinces and selected census metropolitan areas, annual”)
  • Statistics Canada notes that the statistical measure above doesn’t account for the fact that full-time working women tend to work fewer hours than men, often because of family responsibilities. Thus, comparing the hourly wages of full-time working women to those of men provides a more precise picture of the wage gap. On this basis, women earned an average of 87 cents for every dollar earned by men in 2015. ( Moyser, “Women and Paid Work”, Statistics Canada, 2017. 

Does it Matter?

Women’s lower earning power means they are at a higher risk of falling into poverty if they have children and then become separated, divorced, or widowed. They are less able to save for their retirement and more likely to be poor in their senior years; in fact, women 65 or over are more likely than their male counterparts to live on a low income. (T. Hudson and A. Milan. “Senior Women: Prevalence of low income among senior women and men has risen since the mid-1990s”, Statistics Canada, 2016.

The risk of falling into poverty means that women are sometimes forced to stay in abusive relationships, despite the danger. When women work outside the home and do most of the domestic work, their long-term health suffers. According to Statistics Canada, women at every age are more likely than men to describe their days as “quite a bit” or “extremely” stressful.” (based on Statistics Canada. Table 105-0508. “Canadian health characteristics, annual estimates, by age group and sex, Canada (excluding territories) and provinces”)

The wage gap is a symptom of broader gender-based discrimination and inequality — it is just one indicator that gender equality has not been achieved in Canada. By encouraging conversations about Canada’s wage gap, we can continue to address other important topics related to gender equality.

How can we eliminate the gender wage gap?

  • Eliminate barriers for women to enter high-wage occupations.
  • Eliminate barriers for women to enter careers in STEM (Science, Technology, Engineering, and Mathematics)
  • Address systemic discrimination, particularly in male-dominated fields.
  • Advocate for improved workplace policies (childcare, family leave, etc.).

Ultimately everything to spur change rests on recognizing and challenging gender stereotypes that reinforce notions of “appropriate’ work for men and women. Young women, despite their capabilities, “often do not believe they have the academic or professional requirements necessary for succeeding in a given job.” (From Carole Vincent’s “Why Do Women Earn Less than Men? A Synthesis of Findings from Canadian Microdata.” Canadian Research Data Centre Network, 2013, p. 4)

As it stands now, Ontario is gathering feedback on legislation aimed at eliminating the gender wage gap, including asking businesses how onerous pay transparency reporting would be. The current government has paused implementation last year of a law from the previous government that would require all publicly advertised job postings to include a salary rate or range, bar employers from asking about past compensation, prohibit reprisal against employees who discuss compensation and require large employers to track and report compensation gaps.

For Employers, the data is available, the science proved it and methods to rectify what has long been a clearly discriminatory practice, also exist. It’s a matter now, of ‘where there’s a will, there’s a way”. It is time to compensate all employees, irrespective of their gender, based on equality and to their true worth. Its 2019, not the early 19th century when humans were still fighting for fundamental freedoms. Let’s do it, not because legislation will eventually force us to do it, but because It is the true measure of how much employers value their “human” resource – their employees, of ALL genders.

If you’re a Beneplan client, please call or email us to get help with these or any other organizational HR issue that you may face. Also, don’t forget the HR Toolkit section of your client login, for document resources that you can avail of.

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