municipal briefing notes

8/7/2019 Municipal Briefing Notes

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Briefing notes on the Living WageWhy a Living Wage and Why Now?

Many families are struggling to make ends meet. They are doing all the right things. They are workinghard but just arent being paid enough to cover their expenses. In November 2011 voters across theLower Mainland and BC will go to the polls to elect new Municipal Councils and School Boardrepresentatives. These families will be looking for solutions from prospective candidates. One concretesolution any candidate running for election should consider supporting is the implementation of a LivingWage Policy.

Why should Municipal Government and School Boards be worried about this issue?

High living expenses and low wages mean that tens of thousands of working families are living inpoverty in BC . For seven years running, our province has had the highest child poverty rate inCanada. Child poverty in BC is very much a low-wage story; the vast majority of BCs poorchildren live in families with working parents. ( First Call Poverty Report Card 2010 ) A growingeconomy with employment opportunities should not translate into parents working as manyjobs as possible and still being at risk of falling into poverty.

Parents in low-wage jobs are trying to bring up children with one hand tied behind their back .Families who work for low wages face impossible choices buy food or heat the house, feedthe children or pay the rent. The result can be spiralling debt, constant anxiety & long-termhealth problems. Canadian researchers have reported that family income plays a significant rolein influencing child development. Of 27 factors identified as having an impact on childdevelopment, up to 80% were seen to improve as family income increases. ( Report on the Stateof Public Health in Canada 2009, Chief Public Health Officer.)

Municipal Government is paying a large price for the low-wage sector. When children live inpoverty, or when parents are compelled to work multiple jobs to stay afloat and end up withlittle time with their children, all of society pays the price, and not least the municipalgovernments and school boards that must consequently pay in additional services and policing

costs. Directly or indirectly, high school non-completion has enormous fiscal implications interms of expenditures on health, social services and programs, education, employment,criminality and lower economic productivity. Currently, approximately 20% of Canadians aged20 years and over have never completed high school. For Canada as a whole, the aggregatetangible and intangible losses are calculated to be $24,400 per annum per early school leaver, or$43 billion for the country as a whole. ( Lessons in Learning, Canadian Council on Learning.February 4, 2009. )


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How can paying a Living Wage change this situation?

Living Wages are a simple and just solution . Paying a living wage would allow families withchildren to escape poverty and severe financial stress, ensure healthy childhood development,and permit families to participate in the social, civic and cultural lives of our communities.

Local Government has a responsibility to play a leadership role. We look to our localgovernments to help raise the bar to set a higher standard. If enough local governmentsbecome living wage employers, they will create a market for those local service contractors whoin turn pay the living wage.

And Living Wages are good for business. Better pay translates directly into a healthier localeconomy. Low-income families spend almost all their money close to home. And businessesthat have adopted the living wage report higher productivity and reduced staff turnover.

What do we mean by a Living Wage?

In contrast to a provincially legislated minimum wage that is designed to bring individuals up to thepoverty line, the living wage is a social and economic benchmark whose primary purpose is to enableworking families to pay their expenses and lift them out of poverty. It is calculated based on what itcosts to live in a specific community, so living wage amounts will vary across the province as livingexpenses vary. In summary a living wage is the hourly rate of pay that enables wage earners living in ahousehold to:

Feed, clothe & provide shelter for their family

Promote healthy child development

Participate in activities that are an ordinary part of life in the communityAvoid the chronic stress of living in poverty

The living wage is high enough that families can weather a temporary crisis without falling into poverty,but very modest compared to community standards. So it does not include;

Saving for retirement

Owning a home

Debt servicing

Saving for childrens future education

In developing this calculation methodology the Living Wage for Families Campaign worked with theHuman Early Learning Partnership (HELP) at UBC, independent social policy consultants, Victoria SocialPlanning Council, the United Way of the Lower Mainland, First Call: Child and Youth Advocacy Coalition,the Canadian Centre for Policy Alternatives and the Hospital Employees Union. The methodology was


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reviewed by the First Call Living Wage Roundtable, low income parents, as well as a Vancity-organizedemployer focus group.

How is a Living Wage calculated?

This hourly Living Wage rate is calculated based on the living expenses of a family of four with twochildren aged 4 and 7, with both parents working full-time (35 hours/week each). In BC 85% of familiesare headed by couples and 62% have two or more children. The model family is not meant to berepresentative of all working families; rather the living wage measure associated with it should betreated as a baseline on the principle that wages should enable working people to choose to havechildren. Furthermore, the living wage is based on basic working conditions, 70 hours of work per weekbetween two people, and already incorporates government transfers (e.g. the Canadian Child TaxBenefit) and deductions (e.g. taxes, E.I. and CPP premiums.)

And while the actual living wage calculation is focused on couplefamilies with young children, the intent is to ensure that the wage isadequate for single parents, and also that it provides an adequate

income throughout the life cycle so that young adults will not bediscouraged from having children and older workers will have themeans to support aging parents.

The expenses included in the living wage calculation include food,clothing and footwear, shelter and transportation based on theMarket Basket Measure (MBM), an index of expenses developed bythe Human Resources and Social Development Canada to provide aperspective on low income. Additional expenses include child care,provincial Medical Services Plan (MSP) premiums, non MSP-covered

health expenses, limited education amounts for parents, and acontingency amount to provide a two-week cushion in the event of job loss, illness, etc. Based on this methodology The Living Wage ratefor Metro Vancouver is $18.17 per hour . For more details on how theliving wage is calculated please go to www.livingwageforfamilies.ca.

What is a living wage policy/bylaw?

Living wage policies/bylaws stipulate that all directly-employed city staff, as well staff contracted by thecity to work on service contracts in areas such as security, building services, food services, should bepaid a locally calculated living wage. Some Living Wage policies /bylaws pertain to the non-profit sector,

while others exempt this sector.

A living wage policy is different from the minimum wage which is set provincially. A Living Wagepolicy/bylaw is set by the local municipality and only applies to businesses that contract with the city. Itis also different from municipal fair wage policies/bylaws that have sometimes been set for specificoccupations and trades (usually in the construction sectors).


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In Canada there is increasing support for a Living Wage as a way to address the issue of child and familypoverty. New Westminster in BC recently became the first municipality in Canada to pass a Living WagePolicy, with other municipalities across the country, including Esquimalt in Vancouver Island, consideringfollowing suit. Various communities around BC have started calculating what a Living Wage is for theircommunity and forming broad-based coalitions of faith, community, labour, immigrant and businessgroups to advocate for the adoption of Living Wage Bylaws.

More than 140 municipal living wage policies/bylaws have been passed in the US since 1994, including inmany big cities such as New York, Chicago, Boston, Detroit, Cleveland, Los Angeles, San Francisco,Oakland, San Jose and Miami. In fact, close to one half of the US urban population now live in citiescovered by some kind of municipal living wage policies/bylaws.

The Greater London Authority in Britain also has a Living Wage policy/bylaw. The summer Olympics inLondon in 2012 will be the first Living Wage Olympics, where all workers working on the event will bepaid a living wage!

While Living Wage policies/bylaws have been passed by many cities, they generally apply to a small but

not insignificant portion of low-wage workers in a city, in the range of 3-5%. However, they also set alocal benchmark which other employers can follow. Some universities and hospitals, for example, haveresolved to respect municipal wage ordinances.

Sounds great, but does it make economic sense?

Myth : Increasing wages will hurt business.

Fact : Paying living wages is good for business. Having a well-paid and motivated work force is the mostimportant investment any employer can make. Wage increases for low wage earners are spent locally,usually in small businesses. Thus a living wage policy is good for the local economy. Small businesses

draw their customers from the local community. Higher incomes allow families to purchase more goodsand services in their neighbourhoods. As a recent Goldman Sachs report Are the rich all that mattersfor spending? confirms, increasing the income of those on lower wages has a proportionately largerstimulating effect on the economy than increasing the income of those earning more.

Also higher pay results in increased productivity by making jobs more desirable to both get and to keep,thereby reducing recruitment, and training costs associated with high turnover. Passing living wagepolicies and identifying private sector employers as living wage employers creates a market for productsand services produced by workers paid a living wage. Moreover, being identified as a living wageemployer is an effective marketing strategy for businesses eager to respond to changing consumer

habits that are increasingly prioritizing the ethical sourcing and production of goods and services.

Myth: It will cost the city a lot of money and taxes will have to be raised.

Fact : Studies have shown that most municipalities contract costs increased by less than 0.1 percent of the overall local budget in the years after a living wage law was adopted. New Westminster undertook astudy before deciding to pass the living wage policy. This study estimated the costs of the new bylaw asone quarter of 1% of the citys budget. Studies of living wage bylaws in the US show that public costs can


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actually be reduced due to living wage bylaws- for example; the Los Angles living wage bylaw resulted ina 50.4% reduction in the amount of government subsidies received by affected workers and theirfamilies.

Myth: Companies will go elsewhere if the city has a living wage policy.

Fact: The quality of life and the ability to attract a knowledgeable workforce are the main considerationsfor companies when they decide where to locate. Strong communities and good health, education andpublic services attract good employers.

Also many companies that can relocate pay far in excess of the living wage. Many low-wage businessesare actually "support" businesses like restaurants, cleaning companies and retail outlets with little abilityand wish to relocate.

Myth: Companies hire fewer people because they are forced to increase labour costs.

Fact: In a competitive contracting market businesses are usually able to absorb these increased wagecosts through some combination of price and productivity increases, reduced turnover or redistributionwithin the firm. In fact companies receive a healthy return for these increased investments in wages; asIan Tew, Head of Workplace in KPMG, London, UK, a living wage employer, has publicly stated:

I have about 700 in-house and outsourced staff in our UK offices, many of whom are directly servingour clients. So, their calibre, motivation and loyalty are extremely important to us. Paying the livingwage and improving other benefits, like holidays, sick pay and insurance have contributed significantlyto our success. Heres how:

Turnover amongst our cleaning staff has more than halved.

Morale has been raised.

Despite improved sick pay potential abuse has not materialized.

Productivity has improved; attitudes are more flexible and positive.

Service has improved: our help desk gets far fewer complaints.

Myth: Tax credits and better educational opportunities are better ways to help the low-wage workers.

Fact: Income supplements, accessible education and other supports for families are important parts of creating healthy communities. But employers must do their part and pay a decent wage for hard-earned

work; otherwise the taxpayer is left to subsidize their wage bill.

Myth: If wages increase, the cost of everything else will go up.

Fact: Costs rise all the time without workers receiving a pay increase. Wages are just one of manyfactors that make up the cost of an item. Even in labour intensive sectors such as restaurants, increasesin the minimum wage had a tiny impact on prices with no loss in business.


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Its alright asking the public sector to pass a Living Wage policy, but what about the private sector?

The Living Wage for Families Campaign has developed a Living Wage Employer Recognition Programmethat certifies employers that have committed to pay all their staff (both direct and indirect) a LivingWage . If they pay non-mandatory benefits to your employees, the Living Wage hourly rate will bereduced to take account of this. Non-mandatory benefits include employer contributions that help

reduce an expense item that make up the living wage calculation such as extended health/dental care,MSP premiums, child care expenses, transport expenses, professional education development,enhanced vacation and sick leave, etc. They do not include payments that an employer is mandated bylaw to provide such as Employment Insurance and Canada Pension Plan contributions.

We have developed a software tool in partnership with the software company SAP/Business Objects tohelp employers calculate how their benefit package affects their ability to pay a living wage- seehttp://livingwageforfamilies.ca/calculator.

This program has exceptions for staff on probation and student placements. A number of employershave already signed up, and a number of others are in the process of signing up. We hope to publicly

launch this program in the summer of 2011.

The effects of low wage work on children - Melanies story.

Melanie is a sociable l0 year old girl who loves school; she has many friends both at school and in thelow-rent apartment complex where she lives with her mom. Mels mother works long hours at two lowpaying jobs in order to provide the basic necessities. In the past, life was easier for this single mom andher daughter; for 10 years she worked for a hospital and was well paid and worked a regular 40 hourweek. She and Mel had time to do fun things together. However, that job was contracted out and shehad to look for new work.

This has brought big changes into their lives - they had to move to lower cost housing and Mom nowworks two low wage jobs, often 50 hours a week, to provide for their basic necessities. Mom is alwaystired and doesnt have the time, money or energy to do some of the things they used to enjoy doingtogether.

One day Mel brings home a letter from school announcing that the school has made arrangements forthree free swimming lessons for everyone in Grade 5. The children are excited, and when Melanie tellsher mom that she needs a swimsuit for Monday her mother tells her that she cant do it by Monday asshe wont be paid until later in the week and she cant even get to Value Village to look for a secondhand one because she has to work some extra hours. Mel is angry and tearful and tells her mother that

she will be the only one who wont be going and that she will look stupid if she cant go. Mom reactsangrily, telling Mel she doesnt understand how hard it is for her to say she cant afford things and theevening ends in tears, anger and guilt.

On swimming day Mel tells her mother that she is sick and cant go to school. Mom knows what ishappening but has to rush out to work and tells Mel to stay indoors all day and she will try and get homeearly. After a couple of hours Mel is bored and angry and she decides to walk to the mall on her own something she is not allowed to do.


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She wanders around looking at swimsuits and the thought goes through her mind that she couldprobably take one and no one would notice. However, she decides against that and just moochesaround trying on clothes. Her mother phones home to see how she is, and when no one answers thephone after two or three calls, Mom is frantic and calls a neighbour to ask her to check up on Mel. Theneighbour goes over to their apartment and finds that Mel isnt at home. Mom rushes home, missingtwo hours of work, to find Mel arriving back from the mall, and another angry scene erupts.

Next day Mom makes sure that Mel goes to school and Mel tells the other children that she is sick andisnt allowed to swim. She tells them that she doesnt like swimming anyway so she is pleased shedoesnt have to go with them. Mel spends the time they are at swimming in the secretarys office doingsome school work.

When everyone arrives back full of enthusiasm for their swimming lessons, she feigns indifference andwalks away. After a number of events like this, and a couple of birthday parties she cant attend becauseshe cant afford a present, Mel progressively excludes herself from her group of friends, feels angry andher school work starts to suffer. Her mother doesnt know what is happening to her once happy,sociable daughter and feels anxious and helpless and a failure as a parent.

202-1193 Kingsway, Vancouver BC, V5V 3C9

Tel: 604 873 8437 Fax: 604 874 9898

[email protected] www.livingwageforfamilies.ca
mailto:[email protected]:[email protected]

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