Pay gaps—differences in earnings between groups—are among the most visible manifestations of economic inequality. Women in Canada earn less than men; Indigenous peoples and racialized workers earn less than white workers; immigrants earn less than Canadian-born workers. These gaps persist despite decades of legislation, policy initiatives, and shifting attitudes. Understanding why pay gaps exist, what they mean for fairness and equity, and what can be done about them requires examining both individual circumstances and systemic factors. The debate involves deep disagreements about what fairness means, what equality requires, and how markets and governments should interact.
The Landscape of Pay Gaps
The Gender Pay Gap
Women in Canada earn less than men—about 89 cents for every dollar men earn when comparing hourly wages for full-time workers, though the gap is larger when total annual earnings are considered, reflecting differences in hours worked. The gap has narrowed over decades but progress has stalled in recent years. The gap varies by industry, occupation, region, and age, and is larger for some groups of women—Indigenous women, racialized women, women with disabilities—than others.
Racial and Ethnic Pay Gaps
Racialized workers in Canada earn less than white workers. Black, Indigenous, and other racialized groups face earnings penalties even when education and experience are comparable. These gaps intersect with gender, immigration status, and other factors. The term "racialized" itself reflects understanding that race is socially constructed rather than biological, yet its effects on earnings are materially real.
Indigenous Pay Gaps
Indigenous peoples in Canada face significant earnings gaps relative to non-Indigenous Canadians. These gaps reflect colonial legacies, educational disparities, discrimination, geographic factors, and complex interactions of disadvantage. The gaps are not explained away by individual characteristics; systemic factors are central. Indigenous women face particularly large gaps, experiencing intersecting disadvantages.
Immigrant Earnings Gaps
Immigrants, particularly recent immigrants and those from non-Western countries, earn less than Canadian-born workers. Professional credentials may not be recognized. Canadian experience is demanded but not available to newcomers. Accent discrimination affects hiring and advancement. Over time, earnings gaps may narrow, but for many immigrants, particularly racialized immigrants, gaps persist throughout working lives.
Disability Pay Gaps
Workers with disabilities earn less than workers without disabilities. This reflects employment discrimination, access barriers, and accommodation failures. People with disabilities are also less likely to be employed at all, so the gap in employment compounds the gap in earnings for those who are employed.
Explaining Pay Gaps
Occupational Segregation
One major factor in pay gaps is occupational segregation—the concentration of different groups in different types of work. Women are concentrated in caring professions, administrative roles, and service work; men dominate construction, trades, and technology. Racialized workers are overrepresented in lower-paying sectors. Work done predominantly by women or racialized workers is often paid less, raising questions about whether the work is undervalued because of who does it.
Discrimination
Direct discrimination—paying someone less because of their gender, race, or other characteristic—is illegal but still occurs. More common and harder to detect is systemic discrimination embedded in policies and practices that appear neutral but disadvantage certain groups. Bias in hiring, promotion, performance evaluation, and salary negotiation all contribute to pay gaps. Discrimination explains a substantial portion of gaps even after accounting for occupation, education, and experience.
Human Capital Differences
Some pay gaps reflect differences in education, experience, or skills—collectively called "human capital." But these differences are themselves often products of earlier inequities. If Indigenous students receive inadequate education due to underfunded schools, subsequent earnings gaps partly reflect that earlier inequity. Attributing gaps to human capital differences does not mean they are fair or inevitable.
Work Patterns
Differences in hours worked, career interruptions, and work arrangements contribute to earnings gaps. Women are more likely to work part-time and to take career breaks for caregiving. But these patterns are not simply individual choices—they reflect unequal distribution of caregiving responsibilities, lack of affordable childcare, and workplace structures that penalize anything other than continuous full-time work.
Negotiation and Self-Advocacy
Some research suggests that differences in salary negotiation contribute to gaps—that men negotiate more aggressively for higher pay. But this too is complicated: women who negotiate assertively often face backlash that men do not. Focusing on individual negotiation behaviour can blame individuals for systemic problems.
Perspectives on Fairness
Equal Pay for Equal Work
The principle of equal pay for equal work—that people doing the same job should be paid the same—is widely accepted. Canadian law requires this. But this principle does not address occupational segregation; it ensures equal pay within jobs, not across different jobs. If women's work is systematically undervalued, equal pay for equal work does not remedy this.
Pay Equity
Pay equity goes further, requiring that work of equal value be paid equally even if the work is different. This addresses the undervaluation of female-dominated occupations relative to male-dominated ones requiring comparable skill, effort, responsibility, and conditions. Pay equity legislation exists federally and in some provinces, requiring employers to evaluate and adjust wages. Implementation is complex and contested.
Market-Based Views
Some argue that wages should reflect market values—what employers are willing to pay and workers willing to accept. From this view, pay gaps may reflect supply and demand rather than unfairness. Critics counter that markets are not neutral; they reflect and perpetuate existing power imbalances. What the market pays is not necessarily what work is worth.
Intersectionality
Pay gaps affect people differently based on intersecting identities. A Black woman faces a gap that is not simply the sum of the gender gap plus the racial gap; the combination produces distinct experiences. Policies addressing one dimension may not help those at intersections. Intersectional analysis asks whose experiences are centred and whose are overlooked in discussions of pay equity.
Policy Approaches
Pay Transparency
Pay transparency—requiring disclosure of salary information—allows workers to identify and challenge unfair pay. Transparency can expose gaps that secrecy hides. Several jurisdictions have implemented or are considering pay transparency requirements. Employers sometimes resist, citing privacy and competitiveness concerns.
Pay Equity Legislation
Pay equity legislation requires proactive comparison of male-dominated and female-dominated jobs. The federal Pay Equity Act, which came into force in 2021, requires federally regulated employers to establish pay equity plans. Provincial legislation varies; some provinces have robust pay equity regimes while others rely primarily on complaints-based approaches.
Minimum Wage Increases
Since women and racialized workers are overrepresented in low-wage work, minimum wage increases disproportionately benefit these groups. Raising the wage floor can narrow gaps at the bottom of the earnings distribution. However, minimum wage policy alone does not address gaps higher in the distribution.
Childcare Policy
Affordable, accessible childcare enables parents—primarily mothers—to participate more fully in paid work. The federal childcare program aims to reduce costs and expand access. If successful, this could address one barrier to women's earnings. However, childcare alone does not address all factors behind gender gaps.
Anti-Discrimination Enforcement
Employment discrimination based on gender, race, and other grounds is prohibited under human rights legislation. Enforcement through human rights commissions and tribunals provides remedies for individuals who experience discrimination. However, complaints-based enforcement has limitations; systemic discrimination often continues unaddressed.
Employment Equity
Employment equity requires designated employers to identify and remove barriers to hiring and advancement for designated groups, and to take positive measures to increase representation. The federal Employment Equity Act covers federally regulated employers and federal contractors. Programs have had some success but have also been criticized as insufficient or as creating stigma.
Debates and Tensions
Choice and Constraint
Some pay gaps reflect choices—about occupation, hours, or work-life balance. But distinguishing freely made choices from choices constrained by circumstances is difficult. If a mother "chooses" to work part-time because childcare is unaffordable or because her employer will not accommodate her needs, is this meaningfully a choice? Debates about pay gaps often involve disagreements about where choice ends and constraint begins.
Merit and Markets
Defenders of market-based pay argue that wages reflect productivity and value—that pay gaps may be fair if they reflect different contributions. Critics argue that measuring individual contribution is difficult, that contributions themselves depend on opportunities, and that markets are shaped by power dynamics that perpetuate inequality. This is a fundamental disagreement about how economic fairness should be understood.
Costs and Benefits
Policies to address pay gaps may have costs—compliance burdens for employers, potential effects on employment, complexity of implementation. Debates involve weighing these costs against benefits of reduced inequality. Different assumptions about the magnitude of costs and benefits lead to different policy conclusions.
Priorities
Addressing pay gaps is one among many possible equity priorities. Some argue that gaps are a secondary symptom; the root causes are education, housing, discrimination in hiring, and other factors that must be addressed first. Others argue that pay gaps are central to economic inequality and demand direct attention. These are not mutually exclusive, but limited policy attention requires prioritization.
Questions for Further Discussion
- To what extent should governments intervene to address pay gaps, versus allowing market processes to determine wages?
- How should pay equity analysis account for intersecting identities rather than treating gender or race in isolation?
- What role should pay transparency play in addressing gaps, and what are legitimate privacy concerns?
- How can policy address the undervaluation of female-dominated occupations without imposing rigid job evaluation systems?
- What responsibilities do employers have to address pay gaps within their organizations?