Category Archives: Income Inequality

Living Wage IN a Livable Economy

Originally posted in November 2018 on the Edmonton CDC Blog.

In Edmonton, approximately 140,000 workers are identified as low income earners (earning below $16.31 per hour), according to the Edmonton Social Planning Council (source, page 79). Four in five of these workers are over the age of 20 and 60% are women.

The Canadian Payroll Association’s annual survey of Canadian workers identifies that in any given year 45% to 50% of workers across our nation are living pay check to pay check and would face significant hardships, including the loss of their residence, if they went without their pay check for one or two pay periods.

These two sets of data are not indicative of an economy that is working for the majority of Canadians. While businesses may report continued increases in profits and gains for shareholders, this data questions those who laud our economy as strong, vibrant, and sustainable.

For more than a decade, communities across Canada have been setting a “living wage” for their community and advocating for employers to adopt the “living wage” as the minimum hourly wage that they pay their employees. Key players in the development of the fledgling living wage movement have included the Canadian Centre for Policy Alternatives, Tamarack Institute’s Vibrant Communities Canada, Vibrant Communities Calgary, Vibrant Abbotsford, the Living Wage for Families Campaign, and Living Wage Hamilton.

A “living wage” is different than the “minimum wage”. The minimum wage is legislated by governments, while a living wage is voluntary and based on what workers in a family must earn to pay for the “basic cost” of living in their community. The primary focus has been on identifying a living wage for two parents (both working full-time) who have one child in full time day care and one child in before and after-school care.

This means that the living wage is contextual to the cost of living in a specific community and to the configuration of a family. This results in varying living wages across Canada. In Edmonton, there are three living wage benchmarks (Source: Tracking the Trends 2018, Edmonton Social Planning Council).

  • $16.31 per hour for each parent working full time in a two parent, two child family as described above.
  • $17.87 per hour for a single mom, age 31, working full time with a three-year old
  • $17.59 per hour for a single person living on her/his own, working full-time.

It is heartening to see communities collaborate on helping workers make a decent living. The uptake of a “living wage” so far has had some success. Most businesses that pay their employees a “living wage” are smaller businesses, but also include some funders, non-profits, and a few municipalities. So far, the biggest non-government employer to pay its employees a living wage or better is Van City, a credit union in British Columbia.

That said, there are challenges, if not significant issues, with the efficacy of the living wage when one considers the following:

  • The calculation of the living wage is based on family archetypes, which is understandable as a method, but it is also true that each family is different from the other. Archetypes are not reality.
  • Employers do not hire employees or set wages based on family configuration.
  • National employers typically do not have varying rates of pay based on geographic location of their employees.
  • The “living wage” movement faces the major barrier of the private sector’s significant opposition to increases in the minimum wage.
  • The current and accepted framework for identifying a living wage is based on assumptions and values that call into question what the word “living” actually means and that exclude numerous categories of expenses that in effect perpetuate an Us versus Them mindset (see below)

According to Living Wage Canada, these are the guiding principles for identifying a living wage:

  • enables working families to have sufficient income to cover reasonable costs;
  • promotes social inclusion;
  • supports healthy child development principles;
  • ensures that families are not under severe financial stress;
  • is a conservative, reasonable estimate;
  • engenders significant and wide-ranging community support; and
  • is a vehicle for promoting the benefits of social programs (e.g., child care).

Based on these principles, the living wage calculations being made across Canada factor in the following, according to Living Wage Canada (source):

  • A healthy family of four with two children
  • 1 child in full-time daycare, 1 in before and after-school care
  • Full-time hours of employment between two parents (What constitutes full-time hours varies across Canada but is typically between 35-40 hours.
  • One parent taking evening courses at a local college to improve employment capacity
  • Costs of living including transportation, food, rental housing, clothing, childcare, medical expenses and other
  • Inclusion of tax credits, returns and government benefits; namely child tax benefits

Calculating the living wage also considers what is not included as expenses in setting the benchmark, as follows:

  • Credit card, loan or other debt/interest payments
  • Savings for retirement
  • Owning a home
  • Savings for children’s future education
  • Anything beyond minimal recreation, entertainment and holidays
  • Costs of caring for a disabled, seriously ill, or elderly family member
  • Anything other than the smallest cushion for emergencies or hard times

I assume these exclusions are based on the principle of coming up with “a conservative, reasonable estimate” and perhaps engendering “significant and wide-ranging community support.” In doing so, however, the living wage inadvertently creates a “different” class of worker who should not expect to own a home, carry any debt, save or the future of their children’s education or for their own retirement. These exclusions are value-laden.

I wonder if the focus on income programs like welfare rates, AISH pensions, minimum wage, and living wage (in its current form) naturally create and perpetuate a landscape that focuses on providing less to low income persons and those living in poverty than the mainstream would identify as the basic cost of living. In effect are identifying a living wage goal that has negative implications for the future of living wage earners.

As mentioned above, the living wage benchmark is not going to result in employers paying varying rates based on family configuration. And perhaps the most significant problem of the living wage movement is that its existence leads people and organizations to conclude that the current approach to improving wages for workers is actually the model to emulate going forward.

I wonder if a better way to look at wages is to explore what a “livable economy” looks like, which would be an economy that is profitable for the private sector, benefits the majority of workers and provides a standard of living that not only meets basic needs but also the needs workers have with respect to their future and the future of their children.

QUESTIONS TO CONSIDER

  • Rather than focus on a living wage for workers, should we be exploring what a “Livable Economy” is or should be, a robust economy that includes profitable businesses and an equitable share of business prosperity by workers?
  • Should a livable economy have principles that includes the ethics of business and work?
  • What would be the major attributes, features, elements of a livable economy that differentiates it from the current economy?
  • Should a livable economy work for the majority? And how would it address the needs of those who are unable to work full time, part time or at all?
  • Could it be that current tools and measures used to assess poverty rates (e.g., Low Income Measure) present and perpetuate unintended barriers to identifying what a livable income could or should be for workers?
  • Should there be an alternative to the current methodology in identifying a living wage across Canadian communities based on the principle of “equitable prosperity” and other principles that ensure that all workers cannot only have a decent economic life currently but also see the possibility of prosperity in their futures?
  • To what extent do government subsidies promote or pose obstacles to the concept of a livable economy? For example, do benefits like the Child Tax Benefit unintentionally serve as rationale employers can use to keep wages low?
  • How do we address common perceptions that increased wages do the following:

o   translate into fewer jobs paying more

o   companies providing less training and support

o   translate into fewer available hours of work

o   result in higher prices for goods and services, which offset the benefit of higher incomes

o   negatively impact small businesses that cannot afford higher wages

The Edmonton CDC, in collaboration with others, hopes to undertake investigation to what wages should or could look like in a livable economy that works for the majority of Canadian families and individuals. I hope to report more on this work in the future.

THERE’S MORE TO DO TO IMPROVE AISH, ISN’T THERE?

I was at the gathering where Premier Notley and Minister Sabir announced legislation that would improve benefits to recipients of AISH. I support these improvements (read more). My math indicates a 6% increase to the AISH benefit. Some critics say it should have been higher, given the length of time since the last increase. Some say the government could have brought in these changes earlier.

Of course there are others who would choose to reduce AISH benefits while increasing the coffers of the wealthy through tax breaks.

Everybody’s got their opinion on how things should be if they were in charge. If only Premier Notley and her colleagues could accommodate all of us!

I see the changes as a positive development, an additional program reform that will help vulnerable Albertans. I wish the bump had been bigger, but the government has a budget to contend with. The indexing to the cost of living is an appropriate way to ensure that adjustments are made each year. That’s a big change for the better.

Most of us who work in the community change sector, in particular those who work to end poverty, homelessness, and the poor treatment of the marginalized are expressing support for the government’s actions. Some are celebrating it.  Sure, I will clink a glass or two to celebrate the changes, but let’s make sure we see this change as a strong beginning to a path forward toward further reform. We are not done yet, right?

I saw one suggestion via Twitter that folks on AISH should receive the equivalent to the minimum wage that the government requires employers to provide. At 35 hours a week that would amount to $27,300 per year. The increased AISH benefit translates to an annual income of $20,220. There is merit in this idea. If  one believes that an Albertan worker should be entitled to a minimum wage of $15 per hour, why are people on AISH deserving of less? On the other hand, $20,220 is above the poverty line (as of 2015) of $18,213.

The problem with poverty lines is that they are about subsistence in the present. They do not factor in the future of recipients of AISH as they grow older. They do not allow for emergencies in the many forms they manifest in people’s lives. They do not allow saving any money or having the means to do much more than survive.

Survival is not living. Survival is surviving.

AISH should promote more than survival.

What concerns me is that AISH is not really a disability pension that the recipient can count on. Let me provide an example. It’s a real one, not made up. Names have been changed.

John and Mary are married. Mary has a teenage son from a previous marriage and together they have a three year old. Mary is on AISH. Well, actually she is and she isn’t. John has been a low income earner until recently. Each month Mary’s benefit was adjusted (i.e. clawed back) based on John’s monthly income, which varied month to month.

Recently John got a better job that pays reasonably well. His income is still far below the Alberta average, but he is making enough to trigger AISH reducing Mary’s AISH benefit to zero. If one does the math for this family, it is in effect no farther ahead than then when John earned lower wages. I am not suggesting AISH should never be adjusted downward based on family income, but I do wonder if it is appropriate to wipe  it out.

Wiping out the benefit says to Mary, you no longer deserve your own income. You no longer have status with AISH decision-makers and should be happy now being totally dependent on your spouse. And for John who is trying to make a better life for his family, the message is your wife is now your burden. Your extra wages should not benefit your family; they should reduce the cost of Mary on the government.

I have a problem with that.

Doesn’t the claw back marginalize Mary? And John? And their children?

If Mary earned the minimum wage, an employer would not reduce it because John is making more money than he once was.

To be honest, I am not sure how this should work, but how it works now seems wrong to me. AISH recipients are people, not just recipients. Having their income reduced to zero impacts the dignity of people like Mary who want to feel like they are able to contribute to their family’s economic life and future.

Perhaps there are further reforms to consider. Perhaps there is a “middle way” to adjust AISH benefits downward as family income increases. Perhaps there should be a core benefit that never can be eliminated or that should only be eliminated if the family’s income is on par with the average wage of Albertans. Or something like that.

What do you think?

Collective Impact as Uprising

I have written in the past about what I call the pendulum swing or the bandwagon effect. I think this is what has happened with respect to collective impact over the past 10 years. I suggest it also occurred  in the late 1980s when outcome measurement rode into town on its stallion named Logic Model. And it is also happening with the word, “movement.” Today, just about everything is a movement. Also see Collective Impact: Watch out for the Pendulum Swing (click image below for the paper), a piece I wrote for Tamarack in 2015 while I was the CEO of Bissell Centre.

Click Image for Paper

I am simultaneously a proponent and opponent of collective impact. I do not think large-scale change efforts have to embrace the CI framework but also think CI can help create large-scale change. It all depends on how committed folks are to truly changing themselves and their organizations and how well they design and execute their collective efforts. Continue reading Collective Impact as Uprising

LIVING POOR: KAREN’S STORY

Note:  In addition to writing about community change and penning commentary, I am a story teller. I write fiction and spoken word. This piece is a mix of fact and fiction, often called “faction.”

One of my small luxuries in life is having someone come to my house weekly and clean it. I tell myself I need this service because I am so busy, but truth is it’s a luxury for me. I can afford it and to be honest I have the time to take care of my own mess; I just hate doing it.

Karen is the one who takes care of this for me. She is 24 and nearly always cheerful. She does an excellent job and in good time as well.  She is a friend of a friend and when I heard she was interested in providing this service, I decided to give her a go. Continue reading LIVING POOR: KAREN’S STORY

Mandatory Winter Tires and Poverty

Yes, perhaps an odd title for a posting, but bear with me. I was on my way back home from meeting downtown with Alberta Government colleagues who also work in the poverty reduction arena and I heard this call-in show about winter tires and more to the point about whether or not winter tires should be mandatory.

They are in Quebec now but even in some provinces without a mandatory requirement more than 80% of drivers have winter tires. Not so in Alberta where the percentage is just over 50%. Not sure about other low percentage provinces, but here is what went through my mind. Continue reading Mandatory Winter Tires and Poverty