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A living wage: incomes that reflect actual costs of living

05-9-13

Five years ago the city of Vancouver was introduced to a harsh reality – income details of what a family of four would need to make in order to be above the poverty line.  Sounds simple enough, but this calculation shed light on two of the city’s biggest expenses – housing and childcare – and forced people to look beyond a minimum wage to what is called a living wage.  Updated last week, the living wage is now at $19.62/hr and it is sparking a conversation on the working poor that is long overdue.

What is a living wage? It is a regional calculation of the hourly rate that a household of four would need to earn in order to ‘make ends meet’.  This means both parents working full-time at 35 hours a week and is totaled with consideration for the cost of government deductions.  Ten categories are taken into consideration based on local costs such as food, housing, transportation, and childcare.  There is a small amount set aside for clothing, post-secondary education for parents (two college courses per year), a contingency fund, and other household expenses, but not included is:  debt payments, savings for retirement, saving for home ownership, savings for the children’s education, or family emergencies.  It is a bare bones budget.

Spearheaded by First Call BC, the Centre for Policy Alternatives BC Office, the Living Wage for Families campaign was born.  Since the first update which offered living wage calculations for both Vancouver and Victoria ($16.74 and $16.39), the campaign has grown and now there are 11 communities who have living wage calculations in BC (including the Fraser Valley, Prince George, Cranbrook, the Sunshine Coast and Kamloops), with cities outside of BC picking up on the movement.

One of the most interesting, and persuasive, parts of the living wage is that it is affected and dictated by a combination of factors:  wages as well as government spending.  It is a truly mid-road effort whereby government and business can work together to end poverty and enhance family well-being.  Here is an example: if the government covers MSP premiums the living wage in Vancouver drops $0.95 to $18.67.  If an employer provides extended benefits AND the government covers MSP costs, the hourly wage drops to $17.50.

BC is expensive, and Vancouver holds the title of severely unaffordable when it comes to housing. But prices are not only rising, the report, Working for a Living Wage, which breaks down the 2013 update, notes that inequality has also played a role in a low-wage problem:

“The frustration of working harder only to fall further behind is one many Canadians can relate to. Recent CCPA research shows that most families are taking home a smaller share of the economic pie despite working longer hours, getting more education and contributing to a growing economy.”

Poverty is in many wages a low-wage issue.  In the 2012 child poverty report card it was reported that 43% of poor children in BC live in families with at leaves one parent working full-time. According to 2010 stats (the most up to date income data from Statistics Canada) BC has the highest overall rate of poverty and second highest rate of child poverty.

Vancouver’s 2013 living wage is up 2.5% – almost double inflation.  The reasons for this are higher child care, transportation and food costs.  Childcare can reach up to $1900 a month (or $23,000 a year!) in this city – which is higher than university tuition, and completely out of reach for many families. (There is currently a separate call for a $10/day child care plan that would emulate Quebec’s child care strategy)

The call for a living wage is taking root outside of BC as well.  Campaigns are growing in Kingston and Hamilton, ON, and both Grand Prairie and Calgary, AB have calculated the living wage for their city:  $15.55 and $14.50 respectively.  Vibrant Communities Canada and the Canadian Centre for Policy Alternatives recently hosted a forum with the Living Wage for Families to look at building a national living wage framework.  Details on this will be released later this year.

Why pay someone the minimum? It makes more sense to ensure individuals and families can live healthy, balanced lives.