The Case for a Living Wage

by Nancy Langdon

There was a time when having a job meant you wouldn't have to live in poverty – but not anymore. Minimum wages across the country have sunk, in real terms, to their lowest level in 30 years. “The purchasing power of the minimum wage is less than it was in the mid-1970s,” states John Jacobs of the Canadian Centre for Policy Alternatives and author of Time for A Real Raise: The Minimum Wage in Nova Scotia. Anywhere in this country, a minimum wage worker working full time for a full year is still from $5000 to $9000 below even the most conservative poverty measure.

Women are particularly hard-hit by minimum wage policies, representing 65 percent of the minimum wage earners in Canada. Many women working in the service or retail industries are paid at, or slightly above, the minimum wage. As the majority of these sectors are non-unionized, workers rely greatly on government-set minimum wages to achieve some degree of wage fairness.

Low minimum wages drive down the bargaining power of labour groups and make premium wages appear extravagant. While many in the business sector oppose raising the minimum wage for fear it will increase their labour costs and make it more difficult to obtain wage concessions from their workers, some business leaders recognize that there are advantages for business as well. Staff turnover and absenteeism would be reduced, as would hiring and training costs, and productivity-enhancing investment would be encouraged. Those employers who are committed to paying above the poverty line would also not be under-cut by less principled competitors paying poverty wages. An additional benefit for business, notes John Jacobs, is that “increasing minimum wages is good for the local economy. When people with low incomes get a raise, they tend to spend it on goods and services provided by local businesses.”

Right-wing groups such as the Fraser Institute warn that raising the minimum wages will lead to job losses. But experience in the UK, where minimum wages have been raised significantly in the past few years, has shown no net job loss, thanks to the economic activity generated by the increased purchasing power of low wage workers.

Dennis Howlett, executive director of the National Anti-Poverty Organization (NAPO) says: “minimum wages should be set at a level that makes it possible for an individual working full time for a full year to escape poverty”. This means that activists in BC, Manitoba, Ontario, Quebec and Alberta should ask for no less than $10 an hour. Other provinces have lower poverty lines, largely influenced by the population of their largest cities and the related housing costs. Still, even in smaller provinces, a minimum wage lower than $9.40 will not help working Canadians escape poverty.

“A $10 an hour minimum wage is still not enough to support a family,” says Howlett. “We recognize that raising the minimum wage is only one step in the fight against poverty. It doesn't lessen the need for more affordable housing, affordable and accessible childcare and education, drug and dental benefits, a progressive tax system or accessible unemployment insurance. Raising the level of social assistance benefits is also desperately needed, as they fall $11,000 to $15,000 below the poverty line”. In Ontario and New Brunswick, provincial campaigns have been organized to demand a raise in both the minimum wage and social assistance benefits.

In 2000, 30 percent of all low-paid wage workers lived in low-income families. This means an increase in the minimum wage would truly help people living in poverty. Failing real improvements in social policies like the ones outlined by Howlett, raising the minimum wage is a proven means of alleviate poverty – and it's a commitment the government can make that doesn't have a direct cost on its annual budget.

Non-unionized employees are particularly vulnerable to poverty wages; and the best way to raise wages remains to unionize. Although there have been some successful efforts, however, organizing low wage workers is difficult, and a large percentage of these workers remain unorganized. The minimum wage campaign needs the active support of the labour community. Unions campaigning for changes that benefit all workers – organized and unorganized – will demonstrate in a new way the value of unions to the broader population. In many provinces, the provincial federations of labour are involved in minimum wage campaigns. And at the national level, the Canadian Labour Congress and member unions have been very supportive of efforts to launch a national minimum wage campaign.

Women's, student and immigrant and visible minority groups are also involved in campaigns to raise the minimum wage, as they are all disproportionately represented in the ranks of the low waged. Faith groups as well recognize it as an important moral and justice issue and are also involved. Together with anti-poverty groups, they are engaged in campaigns that are already seeing positive results – though much more needs to be done.

Provincial coalitions in at least seven provinces are now actively campaigning for raising the minimum wage. A national coalition has been formed to support these provincial coalition efforts, to help organize coalitions in provinces where they do not currently exist, and to lobby the federal government to reinstate a federal minimum wage at $10 an hour, indexed to inflation.

Nancy Langdon is pursuing a Masters in Social Work at Carleton University, and lives in Ottawa. In the summer of 2005 she did her field placement with NAPO where she worked on the Living Wage campaign.