New BC government should promote a living wage

May 2, 2013

One of the main issues of the BC election campaign is how to deal with the high levels of child poverty in our province. The newly updated living wage calculations for Metro Vancouver at $19.62, Greater Victoria at $18.73 and the Fraser Valley at $16.37 provide a clear picture of the extent of the affordability gap in BC.

A living wage is the hourly wage rate at which a family with two full-time earners and two young children (the most common family unit in BC) can meet its basic needs once government taxes, credits, deductions and subsidies have been taken into account. The living wage allows parents to pay for necessities, support the healthy development of their children, stay out of poverty and participate in the social, civic and cultural lives of their communities.

It is obvious that many families aren’t earning a living wage and are struggling to cover the costs of basic necessities like food, rent and child care. More than one third of families with two children in Metro Vancouver earn annual incomes less than the Vancouver living wage. In fact, low wages are a key driver of child poverty in BC, with almost half of poor children (43 per cent) living in families where at least one adult has a full-time, full-year job and many others living in families with some paid work (part-year or part-time).

Many of the solutions being put forward in the election campaign — though they may differ in approach and priorities — concentrate on job creation and skills training as the key to addressing this affordability gap.

While this approach is an important part of the solution, it ignores two things. Firstly, since the recession, a significant number of the new jobs created have been low-wage jobs.

Moreover, the percentage of minimum wage employees in Canada who work for large businesses has increased from 30 per cent in 1998 to 45 per cent in 2012. In fact, Canada has the highest rate of low wage workers (25 per cent) among rich countries — even higher than the United States.

Secondly, the creation of well-paying jobs also brings with it an increase in low-paid service sector jobs. Every time a new hospital, university, mining or technology firm opens it doors, leading to the creation of many well-paid jobs, it also leads to the attendant creation of a number of low-paying jobs that are usually contracted out to service these institutions’ auxiliary needs, such as security, catering, cleaning or even general administration.

Our economy has shifted to become hugely dependent on the local low wage sector. It is argued that this is an economic imperative in order to keep costs down. However, this has led to high rates of poverty among working age populations and wasted human resources, opportunities and public spending.

As the Organization for Economic Co-operation and Development has concluded, “failure to tackle the poverty and exclusion facing millions of families and their children is not only socially reprehensible, but it will also weigh heavily on countries’ capacity to sustain economic growth in years to come.”

So what needs to be done?

The next provincial government elected in BC should take a leadership role on a number of fronts. Changes in public policy can play a key role in enhancing affordability for families.

The highest-cost items in the living wage calculation, such as shelter and child care fees, should be tackled first. For example, the widely endorsed $10-a-day Child Care Community Plan championed by the Child Care Advocates of BC and the Early Childhood Educators of BC would reduce the Metro Vancouver living wage by $3.36 an hour to $16.26 by reducing a key expense of working families.

The new provincial government could also follow the lead of proposals originating in Britain whereby living wage employers would be rewarded with more government contracts and given tax credits for employing more staff at living wage levels.

Most importantly, the provincial government can ensure that it is not adding to the problem of low wage poverty by contracting for services that pay less than a living wage, whether they are in the areas of education, health, social services or transportation.

What better way for the new provincial government to attract living wage jobs than by becoming a living wage employer itself?

Michael McCarthy Flynn is with the Metro Vancouver Living Wage for Families campaign.