The Minimum Wage should be a Living Wage

Ask anyone earning minimum wage if they’re able to
pay their bills and meet the basic necessities of life and you’ll invariably
get the same answer. If the person doesn’t outright laugh at the thought that
they can make do at minimum wage, they’ll often give a pained, slightly panicked
look, before simply saying “no”, they can’t meet the basic necessities of life
at the current minimum wage. Many people are forced to work two minimum wage
jobs just to make ends meet. And if the worker happens to be the parent in a
single-parent household, often even two jobs isn’t enough. So if the minimum
isn’t enough for workers to meet the basic necessities of life, where does this
minimum come from?

In a lot of ways it’s a legal fiction. The
government sets the minimum wage it’s believed employers can pay, and it’s the
amount believed sufficient to induce people to get up every day and go to
thankless jobs. And they’re sure to keep social benefits even lower, ensuring
in this way that workers will be ironically thankful for their thankless jobs. This
has historically been the Canadian situation – a minimum wage mandated by
legislation and purportedly determined by market forces, discussed in a
dialogue of corporate terms. But times are changing. The dialogue is changing and
where once there was the faceless corporate interest there is increasingly a
human face.

A case in point is the recent activity in Toronto
whereby workers and community partners marched from the Sheraton Centre to
Dundas Square to demand an increase in the minimum wage. Workers and
anti-poverty community groups are bringing the human face to the discussion.

And it’s high-time we had a broader base of input
for the minimum-wage discussion. Not only about the inadequacy of the minimum
wage but also about the creeping prevalence of it. Benjamin Tal, a senior
economist with CIBC has observed this latter problem, saying:

There’s clearly a
movement from high-paying professional, public-sector and construction jobs to
lower-paying and retail jobs. Even within manufacturing, there’s a movement
from high-paying manufacturing jobs to lower-paying[1].

This isn’t news to
most of us. Sid Ryan, President of the Ontaro Federation of Labour (OFL) has
noted similar concerns and notes that unions have long been fighting to help
workers secure a living wage:

The labour
movement has always fought to raise the standards for every worker but the
circumstances facing too many working people are worse than they have been in

 Ryan also adds:

The portion
of Ontario workers toiling for minimum wage has more than doubled from 4.3
percent to 9 percent over the past decade and the situation is only getting
worse. Precarious work used to be the exception but it is fast becoming the
norm. Ontario needs to introduce a host of measures to provide fairness and
equality for every worker, but raising the minimum wage to $14 an hour is the
most important first step[2].


As noted by Ryan and others, this movement from
high-paying jobs to more low-paying jobs strongly underlines the need for the
adoption of a wage that can, at the very least, allow workers to meet the basic
necessities of life.
Living Wage is good for Employers and the Government

Inadequate wage levels don’t just hurt workers.
Employers and society at large are also impacted by low-wages. Workers facing
debt problems and inadequate wages are more likely to suffer illness and
depression. Increased absenteeism and lower productivity is the result. The
children of parents earning inadequate wages also often suffer from health
problems and do poorly in school. From a social perspective this translates
into elevated health care costs and less income tax being generated by the

Employers often bemoan any possible raise to the
minimum wage, arguing that they simply cannot afford greater payroll costs and
that any increase would drive them out of business. Putting aside whether or
not such claims are actually believable, there is a way the government can
intervene to help workers without harming businesses.

I’m speaking, of course, of policy decisions. If
there were greater public supports in place, workers may not need as much of a
hike to the minimum wage to make it a living wage. Universal daycare is one
obvious example of a public support that would reduce the financial burden
shouldered by many workers and would lower the wage-level necessary to reach a
living wage. In Brandon, Manitoba, changes to tax-policy that made more
families eligible for provincial child-care subsidies and for a larger National
Basic Childcare Supplement had the effect of lowering the financial burden on
working families. The result? The living wage decreased by 36% at the same time
as the cost of living increased by 7.6%.

a Living Wage

Unlike the minimum wage, there is no legislated
floor to the living wage. A living wage will take account of costs and living
expenses from region to region and so must be sensitive to the needs of workers
in a particular area. The basic formula used for calculating living wage is:

family expenses = Living wage + Government Transfers – EI, CPP, Income Tax

Annual family expenses will vary from area to area
and the living wage for a worker in Toronto might not be the same as for a worker
in Sudbury. But one constant is that no matter where workers are – the minimum
wage is too low.

The minimum wage in Ontario is presently $10.25.
Unions and anti-poverty groups are calling on the Ontario Liberals to address
this inadequacy and to raise the minimum wage to $14.00. After that, the
minimum wage should be indexed to the inflation rate. It’s believed that this
would bring us somewhere in the neighbourhood of a general living wage[4].

All this is to say that we need a system of
inclusive decision-making on this topic. Gone are the days (if ever there were
such days) when top-down decisions from governments and business interests can
reasonably dictate what an appropriate living wage should be. Employers,
Governments and Workers must collaborate to reach an acceptable minimum wage
level that will at once allow workers to meet basic needs, reduce absenteeism
and boost productivity, and contain social and health care costs. In Ontario,
the minimum wage hasn’t changed since 2010[5].
And even when minimum does increase, it’s not indexed to inflation and is only
a bandaid solution that still doesn’t allow workers to meet their basic needs.
It’s time the minimum wage was increased with a human face in mind – it’s time
a living wage is the absolute minimum workers should expect from their society
and their employers.

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