affordability top of mind for many Canadians, the growing divide between high- and low-income earners is becoming harder to ignore. Racialized workers — those who are Indigenous, Black or other people of colour — make up a growing share of this group and are especially vulnerable.
The federal government can and must act to reduce the growing risks these workers face.
The signs are clear. Canada’s unemployment rate edged up in May, and economic uncertainty is starting to take a toll. We are already seeing declines in manufacturing, transportation and warehousing, sectors where more than half of low-wage workers are racialized.
Not long ago, the picture looked different. From spring 2022 to spring 2023, Canada’s employment rate reached record highs. The post-pandemic recovery allowed many workers to shift into higher-paying jobs, including racialized workers who had long been stuck at the bottom of the wage scale.
That window has closed. The divide between workers in low-wage sectors and those in higher-paying fields such as professional services is growing again.
This gap is particularly stark among racialized workers. As immigration to Canada increased sharply, racialized workers have driven employment growth both at the top and bottom of the labour market. But overall, there has been little wage progress for racialized workers aged 25 to 54. Gains in professional services and utilities have been offset by losses in construction, administrative support and similar sectors.
As more racialized workers enter low-wage jobs, the wage gap — both within that group and between racialized and white workers — is widening. In 2022, 13.1 per cent of racialized workers aged 25 to 54 held low-wage jobs, nearly twice the 7.1 per cent among comparable white workers. By 2024, that share had risen to 15.2 per cent for racialized workers, while the rate among white workers held steady at 7.3 per cent.
A persistent racial wage gap remains. In both 2022 and 2024, racialized workers earned 84.6 cents for every dollar earned by white workers. The gap is even greater for racialized women, who in 2024 earned, on average, 74.1 cents for every dollar earned by a white male worker, a difference of about $10 per hour.
With a potential recession looming and the cost of living still painfully high, low-wage workers risk falling further behind.
Canada is not ready. The federal government has not addressed the weaknesses in Employment Insurance that were exposed during the pandemic. Employment standards and regulations still leave many workers unprotected. Our health and social services are strained and underfunded. Immigrant settlement services are stretched thin, struggling to meet the needs of more than a million newcomers and temporary residents who have arrived in the past three years.
A bold, comprehensive response is urgently needed to tackle the racial disparities and structural inequities built into Canada’s labour market. As governments take on nation-building projects to meet this historic moment, they must ensure no one is left behind.
Katherine Scott is a senior researcher at the Canadian Centre for Policy Alternatives and director of the CCPA’s gender equality and public policy work.
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