Minimum Wage Costs … Everyone

It was Andrew’s first day at his new job. It paid minimum wage but, hey, it was his first job ever. His task was to stack bins that had just been washed out and disinfected. He was given rubber boots and gloves but no apron. So when chemicals from one of the bins sloshed out and down his legs, it filled his boots. He was rushed to hospital with burns from his waist to his feet. No safety training, no proper protection, no union, and now, no job.

Illustration by Paul Lachine
http://plachineillustrations.blogspot.ca/

 Judy works in a big box store stocking shelves on the night shift. It’s supposed to be part time work, but she’s expected to fill in for people who go on holidays or are sick or don’t show up. So it’s full time work at $12 an hour and few benefits with no “promotion” in sight. All the full time positions are filled anyway—all four of them. To make things worse, she has 3 kids in school and spousal support honoured more in the breech, than in the payment. She’s stuck—behind the eight-ball and below the poverty line.

Both Andrew and Judy (not their real names) are in what academics call precarious work: low wage, full time or part time or short term jobs. Whatever you call them, the paycheque won’t get you to the end of the month. Sometimes they are dangerous.

It’s one thing for business to make a profit. There’s nothing wrong with profit—I wish I had more of it. But there is something wrong with the business plan of a company whose profit depends on (or is enlarged by) the public purse.

By Banksy in New York City

By Banksy in New York City

How much we in Canada are paying to help businesses with their profit is hard to gauge with our health care system, our progressive tax system, our social programs and our food banks. But in the US, where everything is monetized, it’s easier. Economists have crunched the numbers and discovered the fast food industry alone costs American taxpayers some $7 billion a year simply because it doesn’t pay its employees enough to live on. Corporate MacDonald’s even set up a ‘McResources Line’ to help its cash-strapped employees apply for food stamps and Medicare.

There are consequences to driving down wages. Canada now has the 3rd highest rate of working age poverty—ahead of every developed nation except Japan and the US (Conference Board of Canada). Inequality, driven by precarious work, is rising almost as quickly in Canada as it is in the America according to the Organization for Economic Cooperation and Development (OECD).

But there is something even more basic at stake. How fair is it to expect people to work a 40-hour week for a wage they can’t live on?

So what do you say we stop talking about whether the minimum wage is too high? It’s costing all of us a lot more than we think. Just ask your local United Way or Public Health Unit how far public resources are being stretched.

Let us, instead, start talking about a living wage—a wage at which those working full time, even if it’s two or three part time jobs, can begin to participate in the economy. A living wage in Ontario is about $15 an hour, give or take, depending on local services.

The United Way of Bruce Grey puts it at $16.76 for 2014 for rural areas. For Owen Sound, it’s $14.77, thanks largely to that city’s bus service—which City Council has been thinking of cutting.

What goes into a living wage? Not liquor or cigarettes or cell-phones—although many people are choosing cells over land lines if they can’t afford both. It covers the basics: food, rent, utilities, clothing, car and insurance (but not repairs), child care, prescriptions, and dental care.

Now, remember, we’re talking a living wage so we have to count the cost of participating in society and helping the economy, even a little bit, by buying stuff. So, throw in a pass to the Y for the kids, the odd family outing, a vacation in Ontario, birthday gifts, school activities, banking fees, tenant insurance, telephone and internet. Add them up and you will find that, if you are a single parent with two children, you need to be making at least $15 an hour.

Temporaty, part time, precarious jobs are outstripping full time jobs. 95% of jobs created last year in Canada were precarious.

Temporary, part time, precarious jobs are outstripping full time jobs. 95% of jobs created in Canada in 2013 were prec arious.

This list doesn’t include things many of us take for granted: computer purchases, cable or satellite TV, a new or used car every so many years, music or gymnastic lessons for our kids, hockey, or lunches and lattes with friends. Or buying a house. You can’t build equity on $15 an hour.

Governments—and we’ll be electing one ofhem on October 27 and another in 2015—have options to eliminate worker poverty. They can restructure the tax system. They can find ways to encourage the return of good manufacturing jobs (by far, the best long-term solution). They can stop fighting the unions. Unions have been part of our capitalist system for over 100 years and were instrumental in redistributing wealth during capitalism’s golden age in the mid 1900s.

But the single most useful thing—and some municipal governments are leading the way on this—is to get more money into more people’s pockets. Councils can lead by passing a living wage policy for their own employees and by writing it into the terms of contracts for out-sourcing as New Westminster has done.

Penny-wise and pound-foolish is never so true as it applies to politicians who think the only bottom line is found on a balance sheet. The real bottom line is the degree to which all citizens can participate in the economic and social life of their community.

© David McLaren October 2014

This essay appeared the Forum section of Sunmedia’s Ontario papers October 10 or 12, 2014.

Some Interesting Links

Austerity is a mug’s game. Greek debt to GDP ratio has grown since its creditors imposed austerity measures. Greeks are hurting, the neo-Nazi Golden Dawn have elected representatives in the Parliament and the heatlh care system has imploded.
Two American Families’ PBS Frontline show about falling out of the middle class; a series of documentaries that has followed two American families from the 1970s. Middle class no more.
‘Poor No More’ the movie looks at the impact of part time and low wage jobs on Canadians contrasted with Ireland and Sweden.
Ontario’s economy has shifted from manufacturing to service (fast food, big box retail, hospitality).
Precarity in the GTA. A study by McMaster University and the United Way Toronto found barely half of people had a full time job that paid well and had benefits.
Precarity in rural Ontario. The Grey Bruce Public Health Unit starts a conversation on the social determinants of health. (50% of health outcomes depend on income, social status and education).
Why precarious work is bad for you. Scarcity of anything can make anyone a bit crazy, but scarcity of money can make you sick.
Why inequality is bad for you. Research on the serious social side-effects of inequality in a community or country. One of the most serious is social and political trust, perhaps one of the reasons for low voter turnouts.
US mayors focus on the lowest paid workers in their cities and vow to raise the minimum wage for city workers and contractors’ employees.
Toronto’s ‘Fair Wage Policy’. Not yet a living wage but Toronto pays its lowest paid workers above Ontario’s minimum wage and obliges City contractors to do the same. The living wage in Toronto is $17.17.
Australians pay 6 cents more for a Big Mac and their minimum wage is $16/hr.
Welfare Queens. How much Walmart and McDonald’s are costing the American taxpayer: $1.2 Billion a year for McDonald’s and for Walmart’s ‘associates’, $1000 per employee a year.
In Owen Sound Ontario (pop 23000), the food bank hands out $40,000 worth of food every month, even during the summer.
Teachers in New Mexico in the US pack their students’ backpacks with food at the end of the day.
It pays to pay well. From the Harvard Business Review: Cashiers at QuickTrip earn about $40,000 a year.

Middle class income shrinks as union membership declines (US data)

After Thatcher in the UK and Reagan the US began busting the unions and deregulating industry, inequality began to rise in the late 1970s.

 

$ Gap US We grew apart

A variety of causes: deregulation of industrial and financial sectors, free trade pulls jobs off-shore, seismic shift in economy from manufacturing to service and in jobs from well-paid full-time to poor part-time, attacks on unions. All exacerbated after the 2008 financial crisis. (US figures, but Canada data mirror these effects).

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About David McLaren

David McLaren is an award-winning writer. He has worked in government and the private sector, with NGOs and First Nations in Ontario. He is currently writing from Neyaashiinigamiing on the shore of Georgian Bay and can be reached at david.mclaren@utoronto.ca. In February 2015, he won the nomination for the NDP to represent the riding of Bruce-Grey-Owen Sound in the 2015 federal election. See that page for writings during the campaign.
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One Response to Minimum Wage Costs … Everyone

  1. Pingback: A New Deal for a Precarious Economy | David McLaren

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