By Seth Klein, Marcy Cohen, and Tim Richards
Families who work for low wages face impossible choices—buy clothing or heat the house, feed the children or pay the rent. The result can be spiraling debt, constant anxiety, and long-term health problems. In many cases it means working long hours, often at two or three jobs, just to pay for basic necessities. Parents end up with little time to spend with their families, help their children with school-work, or participate in community activities.
For six years running, B.C. has had the highest child poverty rate in Canada. The story of child poverty is very much a story of low wages. More than half of B.C.’s poor children (56 percent) have at least one parent working full-time all year. That’s why the living wage is one of the most powerful tools available to address this troubling state of poverty in B.C.
In 2008, the Canadian Centre for Policy Alternatives, First Call Child and Youth Advocacy Coalition, and Victoria’s Community Council copublished the inaugural report Working for a Living Wage. That report calculated that the living family wage was $16.74 per hour in Metro Vancouver and $16.39 per hour in Metro Victoria. Since then, however, family costs have continued to rise and changes have been made to government taxes and transfers.
That’s why the CCPA, First Call, and the Living Wage for Families campaign released an updated 2010 Living Wage for Metro Vancouver—it is now $18.17 per hour.
Importantly, a living wage is not the same as the minimum wage, which is the legal minimum all employers must pay. The living wage sets a higher test—it reflects what earners in a family need to bring home, based on the actual costs of living in a specific community. It is the hourly rate at which a household can meet its basic needs, taking into account both government transfers to families (such as the Canada Child Tax Benefit) and deductions such as income and taxes.
The calculation is based on a family of four with two young children, and presumes that both parents are working full time. (Importantly, the living wage is also enough to support a single parent with one child.) But this is also a conservative budget, with virtually no wiggle room for extras many of us take for granted. It does not cover items such as credit card or other debt/interest payments, savings for retirement, or savings for children’s future education.
The increase in the 2010 Living Wage over the past two years has been driven by three factors: higher food costs, higher rent, and a $113 per month increase in child-care fees.
Notably, the costs of these essential items that low-income families cannot avoid have increased by more than the general rate of inflation (CPI).
The living wage campaign is a call primarily to large private and public sector employers to pay wages to both direct and contract employees sufficient to provide the basics to families with children.
And that is starting to happen. Earlier this month, the City of New Westminster became the first municipality in Canada to adopt a comprehensive living wage policy, a truly bold decision.
Research has shown that paying living wages has concrete benefits for employers, including increased morale and productivity levels, reduced recruitment and training costs, and improved customer satisfaction.
And given that low-income families tend to spend almost all their income in their local communities, boosting the earnings of these households is one of the most effective ways to stimulate the economy.
Government policies and programs also have a direct impact on the living wage calculation. If governments increased transfers like the Child Tax Benefit or the B.C. Rental Assistance Grant, then the living wage would be less. Similarly, if we had a universal publicly funded child-care system, the living wage would be dramatically less. Given this, a key way employers can reduce the payroll costs of the living wage is to advocate for these kinds of progressive policy changes.
Seth Klein, Marcy Cohen, and Tim Richards are co-authors of Working for a Living Wage 2010: Making Paid Work Meet Basic Family Needs in Metro Vancouver, available on the Canadian Centre for Policy Alternatives’ Web site along with a detailed calculation guide for other communities. More on the Metro Vancouver Living Wage for Families campaign, including information for employers wanting to become living wage employers, may be found at livingwageforfamilies.ca/.