The minimum wage is the same as the living wage
The minimum wage is different than the living wage. The minimum wage is the legislated minimum set by the provincial government. Thousands of families making the current minimum wage in BC are still living below the poverty line. A living wage calls on employers to meet a higher standard, to ensure that wages for their staff and major contractors reflect the true costs of living in a community and that parents can earn what they need to support their families.
Companies hire fewer employees if paying the living wage increases their labour costs
Studies show that businesses usually absorb cost increases related to living wage policies through a combination of price and productivity increases, reduced turnover and redistribution of staff. Most workplaces don't have staff that they can do without. When BC raised its minimum wage from $8/hour to $10.25/hour in a relatively short amount of time there was a very small (1.6%) reduction in the employment rate for youth between the ages of 15 and 24 in BC (The Case for Increasing the Minimum Wage, 2015). This is a very small number and we can't be sure that the 1.6% reduction in the employment rate for youth was entirely due to the change in minimum wage or if there were other factors that changed how many youth were working.
Low wages only affect students and young people – they don't need a living wage
A significant number of low-wage workers have families. Paying the living wage will lift these families out of poverty. In BC, one out every three poor children live in families with at least one adult working full-time, year-round (BC Child Poverty Report Card). For example, if we look at workers earning $12-$15/hour only 5% are teenagers and 21% were young adults (The Case for Increasing the Minimum Wage, 2015). Many families across BC are struggling to make ends meet on low wages.
Living wages hurt small businesses
A living wage policy is good for the local economy. Small businesses draw their customers from the local community, and higher incomes allow families to purchase more goods and services in their own neighbourhoods.
If wages increase, prices in stores will go up
Costs rise all the time without workers receiving a pay increase; wages are just one of many factors contributing to the cost of an item. In addition, living wage policies cover only a small percentage of the labour force. When Seattle committed to raise their minimum wage to $15/hour researchers started studying consumer prices for goods. They found that the increase in minimum wage had no impact on the prices of goods, that costs went up by the same amount in Seattle as they did in surrounding communities that didn't see a raise to their minimum wage (University of Washington Minimum Wage Study, 2016).
Workers need to educate their way out of poverty
Under current government policies it is nearly impossible for low-wage workers to afford education or training so they can qualify for higher-paying positions and still have the time and money needed to care for their children effectively. In addition, the business sector will always need low-skilled service workers, such as janitors, cleaners and other support staff, in order to run smoothly and maintain service standards. Listen to Mary Lyn Diana from the Hospital Employees' Union talk about her attempts to educate herself out of poverty.
It can be confusing to figure out what the poverty line is in BC because Canada has no official definition of poverty. There are three main measures of poverty in Canada but the most common measure is the Low Income Measure (LIM). LIM is a fixed percentage (50%) of median adjusted household income, where "adjusted" refers to the household size or the number of members in a household.
Chart: 2015 Child Poverty Report Card, First Call: BC Child and Youth Advocacy Coalition
Getting above the poverty line still does not leave families with economic security. For example, the median rent for a three bedroom apartment in Metro Vancouver for 2013 would eat up 47% of the annual income of a two-parent, two-child family earning $34,742 (2013 LIM).
The method we use to calculate the living wage sets a higher standard. The living wage is a reflection of expenses that family faces in their region.
Poor families face impossible choices: buy food or heat the house, fill a prescription or pay the rent. But child poverty is not just an issue for low-wage families and their children.
When it comes to the increase in child-poverty rates in BC, including the weakening of local economics and the increased costs for public services, we all pay a price, through:
Increased health care costs
Low-income families are not only more vulnerable to poor health than those earning a living wage, they use more health-care resources because illness can make it harder to get out of poverty. Poverty can lead to sickness because of inadequate housing, poor nutrition, and less access to preventative health care. In fact, poverty costs British Columbians $1.2 to $3.8 billion a year in increased health costs, according to the Canadian Centre for Policy Alternatives and BC Healthy Living Alliance.
Increased demands and pressures on our education system
Studies show that children who arrive hungry to school, or whose parents work two to three jobs to make ends meet, struggle academically. Also, teenagers in low-income families are at increased risk of quitting school before graduating Grade 12 – often to supplement their family’s income. As unqualified workers, these teens (and their future families) are also likely to continue living in poverty, and their increasing numbers pose serious implications for the province’s global economic competitiveness and fiscal sustainability.
Lost tax revenue and reduced economic activity
It is well established that lower-income households spend more of their money locally than those in higher-income brackets. And when workers buy goods and services in their local communities, it benefits neighbourhood businesses, many of which are small businesses. (This fact sheet provides details on the ever-increasing role the low-wage sector is playing in BC’s economy.)