Inequality in the workplace follows racialized workers into retirement

The inequity that racialized people see in accessing secure employment follows them into retirement.

Toronto Metropolitan University professors Grace-Edward Galabuzi and Hayden King prepared a report examining this issue for the Canadian Centre for Policy Alternatives. Politics and public administration professor Galabuzi has been following the income gaps that racialized and Indigenous people in Canada experience in comparison to their white peers. His work examines not only income gaps but access to jobs with more stability, better pension plans and improved benefits. The report concludes that the same lack of access that racialized and Indigenous workers experience in the workforce follows them into retirement in the form of poor pension options.

“The overall, racialized senior population’s average total income [in retirement] is $33,900 for men and $25,000 for women,” the authors note in their report,  (PDF file) Colour-coded retirement: An intersectional analysis of retirement income and savings in Canada (opens in new window) . Racialized men were earning 35 per cent less than their white counterparts and racialized women were earning 26 per cent less. 

“When we looked at employment in our earlier research, we saw consistent gaps in terms of income for racialized and Indigenous people,” said professor Galabuzi. “The data from 2010 showed gaps of as much as 23 per cent between racialized and non-racialized populations.” 

But it wasn’t just income that put racialized people at risk of having poor retirement prospects. 

“There was a high level of precarity in their employment. They were in and out of work frequently, and often were in non-unionized roles. All of these factors impact their ability to earn in the workforce,” said professor Galabuzi. This job precarity also means that workers contribute less earnings to the Canada Pension Plan (CPP), which lowers their retirement benefits in the government-supported plan. Moreover, many are living in poverty, making it difficult for them to save for retirement. 

These factors were compounded for women. “It is that intersection of racialization and feminization where we see the intensification of poverty,” said professor Galabuzi, adding that the poverty experienced by women tends to be intergenerational and passed on to their children. The report described the income between racialized women and white men as a “gulf”. 

The report showed that fewer racialized people (39 per cent of racialized men versus 70 per cent of white men, and 34 per cent of racialized women versus 62 per cent of white women) have money invested in registered pension plans (RPP) or registered retirement savings plans (RRSP).

Even those who do contribute to these plans still end up with lower retirement incomes. On average, racialized retired men earn 27 per cent less than white male retired men and racialized retired women earn 14 per cent less than white retired women.

In order to increase security for racialized seniors, policymakers should consider bolstering public pensions like Old Age Security (OAS) and the Guaranteed Income Supplement (GIS), neither of which require ongoing contributions through payroll deductions like the CPP. 

The solutions to improving the situation for women may be less obvious, says professor Galabuzi, but one intervention that might make a difference is child care. As professor Galabuzi explained, “They would have more stable access to employment and improve their earnings as they advance in the workforce. This would improve their contributions to retirement plans as they are able to work for longer segments of their lives.” The new $10 per day daycare program, introduced by the federal government in collaboration with the individual provinces, will help women to achieve better incomes and retirements, but the impact of this program will take years to show measurable positive outcomes. 

Other changes through legislation that addresses racial and gender equity in employment will further close the gap, notes professor Galabuzi.

The same lack of access that racialized and Indigenous workers experience in the workforce follows them into retirement in the form of poor pension options.

Funding for this report was provided by the Canadian Race Relation Foundation and the Canadian Centre for Policy Alternatives.