Relative Low Wages in Canada

I just received my 2006 issue of Society at a Glance: OECD Social Indicators. (Best seen in living colour!)
The OECD now regularly reports systematic national indicators of earnings inequality (Table EQ2.1). I have made wide use in the past of data for the mid to late 1990s circulated in the OECD Employment Outlook, which are now dated. The new data don’t tell quite the same story.

For the most recent year (2003) Canada remains second only to the US in terms of the size of the earnings gap between the bottom 10% of full-time earners and the median full time worker (the median Canadian worker earns 2.0 times as much as the botttom 10% vs 2.1 times as much in the US, with an OECD average ratio of 1.7 . (The ratio is the median to the top of the bottom decile so this is a minimum gap.)

The minimum earnings gap between the top and bottom 10% of full-time earners is 3.9 in Canada vs. 4.4 in the US compared to 3.1 in Sweden, and an OECD average of 3.6. (This is the ratio of the bottom of decile 10 to the top of decile 1.)

While I am pleased to note that wage inequality remains much lower in my favourite Scandinavian countries of social democratic inclination, I regret to report that reported earnings gaps are slowly growing in Sweden and Denmark – principally because the top is slowly growing away from the middle, as is generally the case across the OECD countries.

A central observation does, however, remain – The Scandinavians manage to maintain very successful economies with much lower levels of wage inequality than in Canada or the US.

( I recommend this publication which has become much richer over the years.)