What does “living wage” mean? Is it the same as minimum wage? Who makes it? Is it really liveable?
No, minimum wage and living wage are different, though what they have in common is that they’re both wages that would be paid to someone who doesn’t make a lot of money.
Minimum wages are set by provincial governments and are the legal minimum an employer must pay their employees. A living wage, as defined by Merriam Webster’s Online Dictionary is: a wage sufficient to provide the necessities and comforts essential to an acceptable standard of living.
Isn’t minimum wage acceptable? The government sets it and they’re always right!
Picture it, Toronto, 2013
You’re working in an imaginary donut store we’ll call Pim Forton’s. You make minimum wage, which in Ontario, is $10.25 per hour. You work 40 hours a week, earning you $410.
Here’s your life: You’re covered in cruller crumbs, living in T.O., making $1640 a month . . . oh, and sorry, that’s before tax. Let’s round down to $1500 a month (optimistic).
According to rentjungle.com, the average rent of an apartment in, or within 10 miles of, Toronto is $1550 a month for a ONE bedroom apartment. Let’s pretend you share that apartment (because if you didn’t, you literally could not afford it), so you’re paying $775 a month rent leaving you with $725 for:
FOOD. CLOTHING. HEAT. ELECTRICITY. TRANSPORTATION. PHONE. INTERNET . . . actually, scrap the internet, on this budget you probably don’t have a computer.
This is life on minimum wage. Acceptable? Sure, you’re ‘alive’ but are you really able to live?
Is this liveable?
According to the Canadian Centre for Policy Alternatives (CCPA), the living wage is “calculated as the hourly rate at which a family with two full-time earners and two young children can meet its basic needs, once government taxes, credits, deductions and subsidies have been taken into account”.
Even if math isn’t your number one subject, you should be able to figure out that working at Pim Forton’s, even if your spouse also worked a minimum wage job, won’t afford you and your family of four much more than a few bags of Mr. Noodle and a couple of bus passes each month. The minimum wage is usually below a living wage, especially in bigger cities.
While the minimum wage in British Columbia is $10.25 an hour, the CCPA has calculated that “even with full-time work year round, both parents in a family of four must earn at least $19.14 to escape severe financial stress in Metro Vancouver.”
Theoretically, a living wage provides a worker with not just enough to survive, but also the ability to save (and/or get themselves out of debt if that’s where their situation has landed them) and hopefully participate in recreational activities. On minimum wage, those things are next to impossible for many.
Jean Reynolds, a New Jersey woman who supports five children while making $11 an hour, and who was featured in the documentary Waging a Living, pointed out that minimum wages often remain static for several years while the cost of living does not.
“Every couple months there’s another increase in the gas prices, there’s another increase in your insurance prices, whatever, and we’re not getting that increase on our salary. And that’s where it’s killing us. We’re not keeping rise with inflation,” said Reynolds in the documentary.
It’s up to an employer if they want to pay their employees a living wage. Pro living wage advocates (Like these guys or these guys) believe that employees who receive a living wage are both mentally and physically healthier (more money, better life, more productive), and that organizations willing to pay these wages have less trouble finding and keeping staff. Well, duh!
Arguments against the living wage usually focus on the fact that if employers pay more for employees they will hire less of them. Unfortunately, if that were the case, low income workers, who are the ones meant to be helped by the living wage, could find themselves scrounging over fewer jobs.
That said, if you’re an employer interested in being awesome, you can read all about the benefits of paying a living wage here.
Image credit: easylocum via Flickr.com