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New Brunswick Minimum Wage Factsheet Post-Secondary Education, Training and Labour September 2016 Contents INTRODUCTION ............................................................................................................................... 3 PART 1 - MINIMUM WAGE RATES IN NEW BRUNSWICK ................................................................ 3 1.1 Recent history of minimum wage in New Brunswick ............................................................ 3 1.2 The actual minimum wage rate and the minimum wage rate in 2016 dollars ..................... 3 1.3 The minimum wage as a proportion of provincial median wage.......................................... 4 PART 2 – MINIMUM WAGE EARNERS IN NEW BRUNSWICK .......................................................... 5 2.1 2015 profile............................................................................................................................ 5 2.2 Ten year trend 2006-2015: Changes in the distribution of subgroups of minimum wage earners ......................................................................................................................................... 5 PART 3 – CANADIAN COMPARISONS .............................................................................................. 6 3.1 Minimum wage rates in Canada ............................................................................................ 6 3.2 Percentage of employees earning minimum wage, 2010-2015 ........................................... 7 3.3 Percentage of Employees Earning Minimum Wage by Province, 2015 ................................ 7 PART 4 – COST OF LIVING ............................................................................................................... 8 4.1 Consumer Price Index ............................................................................................................ 8 4.2 Consumer Price Index growth rate, 2007-2015 .................................................................... 9 4.3 Percentage change in total Consumer Price Index for Canada and provinces, 2014-2015 .. 9 PART 5 – ECONOMIC CONDITIONS ............................................................................................... 10 5.1 Economic Conditions ........................................................................................................... 10 5.2 Low income in New Brunswick in 2014 ............................................................................... 11 Page 2 of 11 INTRODUCTION The New Brunswick Minimum Wage Factsheet provides basic information about changes to the provincial minimum wage rate, minimum wage earners, the cost of living and economic conditions in the province, as well as comparisons with other Canadian provinces and territories. PART 1 - MINIMUM WAGE RATES IN NEW BRUNSWICK 1.1 Recent history of minimum wage in New Brunswick The minimum wage rate in New Brunswick is currently set at $10.65 per hour. Over the last ten years, there have been 11 changes to the minimum wage rate: Date of Change January 5, 2007 July 1, 2007 March 31, 2008 April 15, 2009 September 1, 2009 April 1, 2010 September 1, 2010 April 1, 2011 April 1, 2012 December 31, 2014 April 1, 2016 Minimum Hourly Wage Rate $ 7.00 $ 7.25 $ 7.75 $ 8.00 $ 8.25 $ 8.50 $ 9.00 $ 9.50 $ 10.00 $ 10.30 $ 10.65 Source: Department of Post-Secondary Education, Training and Labour 1.2 The actual minimum wage rate and the minimum wage rate in 2016 dollars 1 As shown in the graph below, the minimum wage rate in 2016 dollars peaked in 1976 at $11.72 per hour, followed by a sharp decrease to a low point of $7.32 per hour in 1988. During this period, although the actual minimum wage rate was increasing, those changes did not keep pace with inflation, resulting in lower real wages for minimum wage earners. The rate in 2016 dollars remained just below $8.00 per hour for the next 18 years, up to 2006, which means that changes in the actual rate kept pace with inflation during this time. In 2007, the rate in 2016 dollars began a steady increase to over $10.00 per hour in 2011, thus representing a time when changes in the actual minimum wage rate exceeded inflation, resulting in real wage increases. Since 2012, increases in the actual minimum wage rate have kept pace with but not exceeded inflation, resulting in stable real wages for minimum wage earners. 1 The minimum wage in 2016 dollars represents the real value of the actual minimum wage rate by adjusting for inflation. Page 3 of 11 Actual Minimum Wage Rate and the Minimum Wage Rate in 2016 Dollars: Year-Over-Year Change, December 1974-2015 $ per hour $12 $9 $6 $3 Actual Minimum Wage Rate 2015 2010 2005 2000 1995 1990 1985 1980 1975 $0 Minimum Wage Rate in 2016 Dollars Source: EDSC Minimum Wage Database and the Bank of Canada Inflation Calculator 1.3 The minimum wage as a proportion of provincial median wage Median wage is the midpoint hourly wage rate, where half of New Brunswick employees earn more and half earn less. The minimum wage expressed as a proportion of median wage is a measure used to understand how the minimum wage relates to all wages in the economy. As shown in the graph below, the minimum wage as a proportion of the provincial median wage steadily increased from 2007 to 2013, but has since decreased. In 2015, New Brunswick had the third highest minimum wage as a share of median wage among Canadian provinces. In April 2016, the minimum wage as a percentage of the median wage in New Brunswick was higher for certain groups: • • • 94% of youth aged 15-24; 60% of women compared to 53% of men; and 89% of part-time employees compared to 53% of full-time employees. Minimum Wage as a Proportion of Median Wage: Monthly Change, January 2000-April 2016 60% 55% 50% 45% 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 40% Sources: ESDC Minimum Wage Database and Statistics Canada, CANSIM Table 282-0071 Page 4 of 11 PART 2 – MINIMUM WAGE EARNERS IN NEW BRUNSWICK 2.1 2015 profile In 2015, there were 18,500 minimum wage earners in New Brunswick, representing 6% of all employees in the province. Of these minimum wage earners, the dominant groups are teenagers, women, part-time employees, non-unionized employees, and those who had a high school diploma or less: • • • • • • • • • • • • 54% were between the ages of 15 and 24. The incidence of receiving minimum wage was much lower among older age groups, with only 3% of employees at the core working age (25-54) and 4% of employees 55 years of age or older being minimum wage earners. 56% were female. 54% worked part-time. 69% were permanently employed. 97% were not unionized. 50% had less than 12 months of job tenure. 59% had a high school diploma or less. 28% had completed a post-secondary education program. 68% worked in sales or service occupations. 34% worked in retail trade. 24% worked in accommodation and food services. 2.2 Ten year trend 2006-2015: Changes in the distribution of subgroups of minimum wage earners Subgroups Age Groups: Age 15 to 19 Age 20 to 24 Age 25 to 54 Age 55+ Gender: Male Female Employment Type: Full-time Part-time Percentage of Minimum Wage Earners in 2006 Percentage of Minimum Wage Earners in 2015 Difference 47.3% 12.4% 31.8% 9.3% 33.5% 20.0% 31.9% 14.1% -13.8 (% pts) +7.6 (% pts) +0.1 (% pts) +4.8 (% pts) 38.8% 61.2% 44.3% 55.7% +5.5 (% pts) -5.5 (% pts) 41.9% 58.1% 47.0% 53.5% +5.1 (% pts) -4.6 (% pts) Page 5 of 11 Subgroups Job Permanency: Permanent Temporary Union Coverage: Unionized Not Unionized Job Tenure: Less than 1 Year 1 to 5 Years Over 5 Years Education Level: High School or Less Post-Secondary Credential Occupation: Sales & Service Workers Percentage of Minimum Wage Earners in 2006 Percentage of Minimum Wage Earners in 2015 Difference 65.9% 33.3% 68.6% 31.4% +2.7 (% pts) -1.9 (% pts) 4.7% 94.6% 3.2% 97.3% -1.5 (% pts) +2.7 (% pts) 60.5% 26.4% 13.2% 50.3% 33.5% 16.2% -10.2 (% pts) +7.1 (% pts) +3 (% pts) 69.8% 58.9% -10.9 (% pts) 18.6% 28.1% +9.5 (% pts) 70.5% 67.6% -2.9 (% pts) Note: Rounding errors may exist Source: Department of Post-Secondary Education, Training and Labour PART 3 – CANADIAN COMPARISONS 3.1 Minimum wage rates in Canada As of April 1, 2016, New Brunswick had the eighth highest minimum wage rate across Canada. Jurisdiction Nunavut Northwest Territories Ontario Alberta Yukon Manitoba Nova Scotia New Brunswick Quebec Newfoundland and Labrador Minimum Wages as of April 1, 2016 $ 13.00 $ 12.50 $ 11.25 $ 11.20 $ 11.07 $ 11.00 $ 10.70 $ 10.65 $ 10.55 $ 10.50 Page 6 of 11 Minimum Wages as of April 1, 2016 $ 10.50 $ 10.50 $ 10.45 Jurisdiction Prince Edward Island Saskatchewan British Columbia 3.2 Percentage of employees earning minimum wage, 2010-2015 Although the Canadian average has remained relatively constant since 2010, the percentage of employees earning minimum wage increased from 6.6% in 2010 to 9.7% in 2012, and has decreased every year since, to its current level of 6%. Jurisdiction Canadian average 2010 2011 2012 2013 2014 2015 7.1% 7.1% 7.2% 6.9% 7.2% 7.1% 6.6% 7.7% 9.7% 8.0% 6.7% 6.0% 2 New Brunswick 3.3 Percentage of Employees Earning Minimum Wage by Province, 2015 In 2015, New Brunswick, tied with both Quebec and Newfoundland and Labrador, had the fifth lowest percentage of employees earning minimum wage. ON 10.6% Canada 7.1% NL 6.0% PE 7.5% NS 7.1% NB 6.0% QC 6.0% MB 5.4% BC 5.0% SK 3.0% AB 2.7% 2 Based on Labour Force Survey definitions where the total for Canada is the sum of the provincial estimates. Page 7 of 11 PART 4 – COST OF LIVING 4.1 Consumer Price Index The Consumer Price Index (CPI) is a measure of inflation from the perspective of a typical Canadian consumer. It is calculated by averaging the changes in the price of a fixed basket of consumer goods and services, each of which is weighted according to consumer spending patterns. Basket weights are updated every two years based on Statistics Canada’s Survey of Household Spending. As shown in the table below, the price of consumer goods and services in New Brunswick increased by 0.5% between 2014 and 2015. The category of consumer spending that increased the most was food, which increased in price by 4.8%. This was offset by a decrease in the cost of transportation, largely due to continued low interest rates and lower gasoline prices. There were modest increases to costs associated with household operations, furnishings and equipment (1.8%); health and personal care (1.6%); recreation, education and reading (1.7%); and alcoholic beverages and tobacco products (1.5%). The prices of shelter and clothing and footwear were stable during this time period, showing small increases of 0.2% and 0.3%, respectively. New Brunswick total CPI and product groups All-items Food Shelter Household operations, furnishings and equipment Clothing and footwear Transportation Health and personal care Recreation, education and reading Alcoholic beverages and tobacco products Percentage change from 2014 to 2015 0.5% 4.8% 0.2% Basket weights in 2013 100.0% 16.7% 22.2% 1.8% 14.3% 0.3% -4.0% 1.6% 1.7% 1.5% 6.2% 21.9% 5.2% 10.6% 3.0% Source: Statistics Canada, CANSIM Table 326-0021 and 326-0031. Page 8 of 11 4.2 Consumer Price Index growth rate, 2007-2015 Over time, CPI growth in New Brunswick has been similar to that seen throughout Canada. During the 2008-2009 recession, there was only a slight increase in the cost of consumer goods and services. 2007 to 2008 to 2009 to 2010 to 2011 to 2012 to 2013 to 2014 to 2008 2009 2010 2011 2012 2013 2014 2015 CPI growth Canada 2.3% 0.3% 1.8% 2.9% 1.5% 0.9% 2.0% 1.1% New Brunswick 1.7% 0.3% 2.1% 3.5% 1.7% 0.8% 1.5% 0.5% Source: Statistics Canada, CANSIM Table 326-0021. 4.3 Percentage change in total Consumer Price Index for Canada and provinces, 20142015 Canadians paid 1.1% more for consumer goods and services in 2015 than they did in 2014, roughly twice the increase seen in New Brunswick. Prince Edward Island was the only province to experience a reduction in the costs of consumer goods and services. New Brunswick has not experienced negative CPI change over the past 30 years. SK 1.6% Canada 1.1% QC 1.1% NL 0.5% NS 0.4% ON 1.2% MB 1.2% AB 1.1% BC 1.1% NB 0.5% PE -0.6% Source: Statistics Canada, CANSIM Table 326-0021. Page 9 of 11 PART 5 – ECONOMIC CONDITIONS 5.1 Economic Conditions The provincial economy continues to be impacted by the recession that began in Canada in 2008. Canada and New Brunswick both saw a reduction in real Gross Domestic Product (GDP)3 growth from 2008 to 2009. New Brunswick’s real GDP growth has trailed the national average every year from 2009 to 2014, although preliminary estimates show an increase of 1.9% in New Brunswick for 2015. Employment levels have declined every year in New Brunswick since 2008, with the exception of a small increase between 2012 and 2013. New Brunswick’s unemployment rate increased from 8.5% in 2008 to a high of 10.3% in 2013. The unemployment rate dropped in 2014 and 2015, although decreases in employment for these years suggest that this was largely due to individuals leaving the labour force. Real GDP growth rate: 2007 to 2008 to 2009 to 2010 to 2011 to 2012 to 2013 to 2014 to Geography 2008 2009 2010 2011 2012 2013 2014 2015 Canada 1.0% -2.9% 3.1% 3.1% 1.7% 2.2% 2.5% 0.9%* New Brunswick 0.8% -1.5% 2.0% 0.2% -1.0% 0.4% -0.3% 1.9%* *Note: 2015 real GDP data is preliminary and is subject to change. Source: Statistics Canada, CANSIM Table 384-0038, 379-0030 and 379-0031. Employment growth rate: 2007 to 2008 to 2009 to 2010 to 2011 to 2012 to 2013 to 2014 to Geography 2008 2009 2010 2011 2012 2013 2014 2015 Canada 1.4% -1.7% 1.4% 1.5% 1.3% 1.5% 0.6% 0.8% New Brunswick 0.9% -0.2% -0.5% -0.7% -0.7% 0.4% -0.2% -0.6% Source: Statistics Canada, CANSIM Table 282-0002. Unemployment rate: Geography 2008 2009 2010 2011 2012 2013 2014 2015 Canada 6.1% 8.3% 8.1% 7.5% 7.3% 7.1% 6.9% 6.9% New Brunswick 8.5% 8.7% 9.2% 9.5% 10.2% 10.3% 9.9% 9.8% Source: Statistics Canada, CANSIM Table 282-0002. 3 GDP is the total value of goods and services in the economy. Increases and decreases over time indicate expansion and contraction of the economy. Real GDP adjusts for inflation. Page 10 of 11 5.2 Low income in New Brunswick in 2014 There are three types of threshold used to define low income households: the low income measure (LIM), low income cut-offs (LICOs), and Market Basket Measure (MBM). The LIM is a threshold representing a fixed percentage (50%) of median income adjusted by household size. LICOs represent thresholds below which a family can be expected to spend 20 percentage points more than the average family on food, shelter and clothing. LICOs vary according to family and community size, and may be calculated before or after tax. The MBM is a measure of low income based on the cost of a specific basket of goods and services representing a modest, basic standard of living for a reference family of two adults and two children. The MBM can be calculated at a finer geographic level than LICOs. Estimates for the number of people living in low income households vary according to which measure is used. In 2014, 15.9% of the population of New Brunswick lived in a household earning less than the LIM threshold. The number of New Brunswickers living below the MBM threshold was smaller, at 12.3% of the population. The LICOs generated the lowest estimates, with 10.1% of the province living in households below the before-tax LICO threshold, and 6.7% living in households below the after-tax LICO threshold. Low income measure Low income measure after tax (LIM) Low income cut-offs after tax (LICO) Low income cut-offs before tax (LICO) Market basket measure (MBM) Number of persons in low income 116,000 49,000 74,000 90,000 Percentage of persons in low income 15.9% 6.7% 10.1% 12.3% Source: Statistics Canada, CANSIM Table 206-0041. Page 11 of 11