Setting the record straight on the living wage

Submitted by Lyndsey Butcher on August 17, 2016 - 12:37am

The Frasier Institute has been promoting a number of claims concerning the impact of the living wage on low wage earners. These claims were based on unrelated data with no bearing on the experience of living wage initiatives here in Canada. The living wage movement has been growing across the country and hundreds of employers have begun putting their money where their values are. Late last year living wage initiatives from across the country joined together to launch Living Wage Canada an organization that has developed a nationally consistent calculation framework and recognition process for living wage employers.

A living wage is not the same as the minimum wage, which is the legal minimum all employers must pay. The living wage is calculated as the hourly rate at which a household can meet its basic needs, once government transfers have been added to the family's income and deductions have been subtracted. The rate takes into account housing, food and transportation costs based on data from Statistics Canada, Public Health and the CMHC. The rate also makes considerations for skills upgrading, childcare, and healthcare costs. 

The goal of the living wage is to get families out of severe financial stress by lifting them out of poverty and providing a basic level of economic security. Throughout south-western Ontario living wage rates have been calculated between $14.75 and $16 an hour and relate directly to the cost of living in specific communities.

The living wage benefits workers, employers, and our local economy. Where living wages have been implemented, studies show that productivity improves and there's a significant reduction in training costs and absenteeism. Employers also gain the benefit of public recognition for being a responsible business in a consumer-savvy marketplace. As one living wage employer in Hamilton, Dan Peace, owner of Dominion Pattern Works noted, “Paying a living wage is good for business. Staff turnover plummet, service quality and employer morale increases and productivity improves. The return on investment is significant.”

The local economy benefits from living wage programs through increased consumer spending as low wage earners re-invest their paycheque right back into the local economy. As economist Armine Yalnizyan has noted, “People at the bottom of the income spectrum spend all the money they have, and more. Increase their pay, they spend more money, raise demand, boost the economy. Employers don't create jobs; consumers do.”

Community-driven living wage programs across Ontario are building momentum and have encouraged large and small employers alike to sign up to become living wage employers. Employers that have signed on commit to paying all of their staff, including contracted staff, such as cleaning and food services, a living wage. In Hamilton, a number of businesses from fitness centres to venture capital companies to industrial services have already signed on to pay a living wage. In Calgary the living wage program has been able to sign on over fifty employers in just five years.

The living wage is a call to action for employers to play an active role in reducing working poverty in our community. It’s about fairness, good jobs, and a strong local economy. Living wage programs do make a difference and have been demonstrated, time and again, to help workers and their families make ends meet.

Lyndsey Butcher is the Project Manager for the Living Wage Leaders of Waterloo Region