The wage gap for older workers is less about age than re-entering the workforce, expert says
With older adults re-entering and staying in the workforce longer, should employers be rethinking how they approach salaries for this age group?
Statistics Canada’s 2026 Labour Force data shows people aged 65 and older made up 23.32 per cent of the working population, a bump from 20.5 per cent in 2019. The increase comes after a pause, when the working population saw no increase from 2023 and 2024 due to a rise in temporary immigrants in the workforce.
Further data from Statistics Canada, based on its 2022 Labour Force Survey, shows workers aged 55 and older earned a median hourly wage of $27.25, compared with $30.13 for core-aged workers between 25 and 54 — a gap that raises questions about how older workers are being compensated when they return.
For employers with older workers increasingly part of the talent pool, it raises the question of whether its time to give salaries a second look — especially given what that experienced talent brings to the workforce.
Research shows older workers aged 50 and up can help ease skills shortages and improve labour-market stability. A Statistics Canada productivity report published this year found that firm productivity rises with workforce age — peaking when the average worker is in their 40s, with those firms 8.8 per cent more productive than those with an average worker age of 25 or younger.
Tammy Schire, a professor of economics at Wilfrid Laurier University in Waterloo, Ont., who studies the economics of aging, says the gap in wages for older workers is less about age and more about what happens to anyone who has to re-enter the workforce.
“If you have to change jobs — leaving an employer and trying to find something brand new — you’re not just stepping back five years on that career ladder. You’re stepping back a lot further, to where you were still building those new skills,” she says.
How wages and salary climb
When an older worker changes employers — whether by choice or not — they rarely step into the same salary they left behind, Schirle says.
While she notes it is very rare for older adult workers to be laid off and have to start all over again, it does happen — and when it does, it means having to step back into the career ladder.
Schirle points out that wages climb faster in the early years of a job, when an employer is investing in someone still building skills.
“If you followed your wages over your lifetime — say you had a long-term career, 25 or 30 years with the same employer — the first few years is where you’re going to see those really big raises. You’re learning a lot on the job, gaining a lot of skills, they’re paying you to stick around,” she says.
After 15 to 20 years, those big raises stop as the job and skills do not change much. When older workers come back — or are forced to step back into the career ladder — they are rebuilding at a skill level several rungs below where they left, she says.
In fact, the ADP Canada Pay Insights report from August 2026 shows workers aged 55 to 85 recorded the weakest annual pay growth of any group at 2.8 per cent, compared to workers aged 25 to 34.
“You’ll be taking several steps down that job ladder and finding yourself among people who are still five or 10 years into their job. Suddenly, you’ll be paid just as much or less than them. That feels wrong. You’ve been doing this work for 30 years. But in this new role, some of those younger, less experienced workers also have skills you haven’t picked up yet,” Schirle says.
She points to this trend occurring in the manufacturing industry.
“When a plant closes down, the people who have been working there — especially tradespeople or those in the production process — they know that process well. They have to take a step back and find something new, and if they find a new job, it’s going to be at a much, much lower wage. That’s a regular thing we see in the data. Then, it takes a few years of working again before they get back to where they were,” she says.
Does an age penalty exist?
While there is research pointing to age discrimination for older workers, Schirle notes that does not necessarily mean older adults face a steeper wage cut than younger workers with similar experience.
“Their chances of getting called back for an interview are slightly lower than somebody younger with similar experience or similar job skills,” she says
“It’s not entirely clear what mechanism is underlying that, or what employers have in mind — whether it’s concerns about an older person’s skills with technology or their long-term commitment to a job.”
What employers can do
With older workers making up a growing share of the talent pool, how should employers re-examine salary? Schirle says it starts with helping them move through that ladder quickly.
“I’d make sure I was sensitive to the fact that I might be looking at somebody who has great general experience in the labour market and who is trying to manage some big changes,” she says. “I’d want to handle that in the most positive way possible — giving them opportunities for training that I would certainly give any younger employee, to help them work back up that ladder quickly.”
Schirle also points out that means not underestimating what decades of experience in the workforce quietly brings to a role — the kind that does not always show up in a job posting.
“There are less obvious skills that come with general experience in the labour market, which can be very valuable to an employer as well,” she says.
“Typically, older individuals in the labour market have reached their peak salaries,” Schirle says. “For any person, it’s very difficult to take a pay cut and have to start again.”
