Make the minimum wage a living wage

CWP had the opportunity to present to the Ontario government’s minimum wage panel on November 7th.  Using a human rights framework as a guide, we recommended that the minimum wage be set at a living wage.  See our full presentation made by Executive Director, Leilani Farha, below:

Thank you for the invitation to appear before this panel.

1.            Canada Without Poverty – Canada Sans Pauvreté, formerly known as NAPO or the National Anti-Poverty Organization, is a national organization with a 42-year history of challenging poverty in Canada. Our Board of Directors is comprised of representatives from every province and territory, all of whom have lived or are living in poverty.

2.            CWP has one central recommendation to make regarding the setting of minimum wage, from which flow several subsidiary recommendations.  Our central recommendation, answering Question 1 of the Consultation paper, is that the Government of Ontario must consider its international human rights obligations with respect to the minimum wage.

3.            This is neither an abstract nor a ‘pie in the sky’ recommendation.  The Government of Ontario has a legal obligation to uphold international human rights law.  And, as I will discuss, a number of human rights bodies within the United Nations system have provided governments in Canada with concrete recommendations as to what must be done with respect to minimum wage in order for Canada to comply with international human rights law.

4.            Let’s back up. From where do Ontario’s international human rights obligations derive? Canada has ratified a number of international treaties, like the International Covenant on Economic, Social and Cultural Rights (ICESCR), which commit Canadian governments to guarantee the enjoyment of economic, social and cultural rights by everyone.   According to the Vienna Convention on the Law of Treaties, alongside the federal government, provinces are equally committed to international treaties, especially in areas that fall within provincial constitutional jurisdiction such as the setting of minimum wage standards.  And recently we have seen the federal government abdicate any responsibility for human rights matters that they deem to be within provincial jurisdiction. In other words, if people in Canada are to enjoy their human rights, provincial governments must step up to the plate and play their role.

5.            What does international human rights law say about minimum wage?  In consultation with the provinces, Canada ratified the International Covenant on Economic, Social and Cultural Rights (ICESCR) in 1976.  The ICESCR provides everyone with the right to “just and favourable conditions of work” which includes ensuring that all workers are remunerated so that they can provide a decent living for themselves and their families”(Article 7).  “Decent living” has been interpreted and understood in international human rights law to mean that workers have the right to a living wage.[1]

6.            In this context, Canada has been repeatedly told by the UN human rights system that in order to meet its international human rights obligations, it must raise the minimum wage to a living wage.  For example, in 1998, when Canada was reviewed by the Committee on Economic, Social and Cultural Rights – responsible for monitoring Canada’s compliance with the ICESCR – the Committee stated in its Concluding Observations that it was “concerned that the minimum wage is not sufficient to provide an adequate standard of living for a worker and his or her family.”[2]  They reiterated this same concern in 2006 noting that the Government had not sufficiently responded to the 1998 concern.[3]  In 2009, after his Mission to Canada, the Special Rapporteur on the Right to Housing recommended that provinces and territories review their minimum wage rates in light of the homelessness problem in Canada.[4]  And, more recently, the Special Rapporteur on the Right to Food told governments in Canada in his final report that minimum wage must be “at least a living wage” in keeping with Article 6 and7 of the ICESCR, recommending that governments specifically:

… (c) Set the minimum wage as a living wage, as required under the International Covenant on Economic, Social and Cultural Rights and consistent with ILO Conventions No. 99 (1951) and No. 131 (1970), particularly as regards the requirement that the minimum wage should be fixed taking into consideration, inter alia, “the needs of workers and their families, taking into account the general level of wages in the country, the cost of living, social security benefits, and the relative living standards of other social groups;”[5]

7.            The UN human rights system views a living wage to be one of a number of essential measures required to ensure an adequate standard of living for everyone.

8.            This panel has no doubt heard and received plenty of evidence that shows that for many, Ontario’s minimum wage does not constitute a living wage.  A number of studies show that the income of a single adult working full-time at minimum wage is more than 20% lower than the Low Income Measure. In other words, many minimum wage earners live well below the poverty line, unable to pay their rent, feed themselves and their families nutritious food, unable to secure affordable childcare, and unable to afford other basic necessities.  In this way, the Government of Ontario is failing to meet its international human rights commitments and is failing the working poor. This could change with the introduction of a living wage.

9.            If Ontario were to take a leadership role by adopting a living wage in compliance with articles 6 and 7 of the ICESCR, perhaps as a starting point with single adults, Ontario would become a leader in Canada – the province to beat. Ontario will be the first province to take seriously its human rights obligations.

10.          Though we recognize the strengths of the Low Income Measure, particularly for international comparisons, CWP favours the Market Basket Measure (MBM) as the appropriate measure against which a living minimum wage should be developed.  The MBM analyzes the actual cost of living (including basic needs and important household expenses) and is thus a true reflection of the costs facing individuals and families, and offers insight into what constitutes ‘average’ expenses.  The MBM is in line with current living wage methodology that considers what a ‘basket’ of necessary goods costs in particular regions and uses this information to annually formulate a wage level appropriate to meet these needs.

11.          The living wage demonstrates that everyone has a role to play in alleviating poverty.  While wages are the responsibility of employers, the living wage can be responsive to the differing needs of households depending on size, configuration, etc. and relies on the availability of government programs to ensure other aspects of an adequate standard of living are covered.   In this way, the living wage demonstrates that when government and business work together, the costs of support is shared.  For example, when housing supports and childcare are provided by government, the level of the living wage decreases as an individual would need to earn less to support their household expenses.   This is what makes the living wage unique – it is a collaborative solution that utilizes the economy and social supports.

12.          The Government of Ontario has many reasons to adopt a living wage:

• A living wage is required by international human rights law;
• Most employees receiving minimum wage in Ontario work for private corporations – not small “mom and pop” shops – who can absorb the cost of an increase to minimum wage, with very little threat to the size of their work force.
• People at the bottom end of the economic spectrum spend what money they have; by increasing the minimum wage to a living wage, more money will be put right back into the economy, which is good for Ontario’s business sector.
• In order to work, people need childcare, an adequate income for housing, food, decent clothing, health care services, utilities, etc.  Employers have to bear some of the burden, alongside government, for these expenses. When employees are underpaid, government is expected to pick up the pieces. In this way, a living wage supports government.
• Studies show that there are real benefits to paying a living wage such as: lower absenteeism, improved quality of work, positive impact on retention, as well as positive attention for businesses who are heralded as ethical employers.[6]  In the United Kingdom, the Mayor of London, Boris Johnson, has endorsed the living wage and more than 400 employers have introduced it, including: JP Morgan, KPMG, The London Business School, and Barclay’s Bank.
• Currently British Columbia is leading the charge in regards to a living wage for families thanks to local organizations and community activists.  The city of New Westminster earned the title of the first government in the country to adopt a living wage policy in 2010, and since then a number of businesses have joined on including the Canadian Centre for Policy Alternatives and VanCity Bank.

13.          CWP believes that increasing minimum wage to a living wage is an important component of combatting poverty in Ontario: however, it is not a complete solution. CWP does not believe there is one solution to addressing poverty.  In keeping with the way in which the UN human rights system understands solutions to poverty, CWP believes that we need a coordinated and comprehensive set of programs and policies which, when taken together, are responsive to and address the different needs of low income households.  In other words, a living wage will only be effective at ensuring an adequate standard of living, if it is instituted alongside other poverty eradication strategies such as: a provincial strategy to address homelessness and inadequate housing based in human rights; a provincial childcare strategy; a food security strategy based in human rights; and tax benefits for low-income households.  The need for and effectiveness of this multi-pronged approach is, to some degree, born out by the Government’s own experience and admission.  The Government’s webpage on the Poverty Reduction Strategy boasts that in 2012 (as compared to in 2003) a single mother with two kids who is working full-time in a minimum wage job and accessing all available benefits will earn approximately $2,000 above the LIM.  This suggests that it is not the minimum wage per se that ensures she lives above the poverty line, rather, it suggests that the minimum wage is interacting with other benefits and for that reason, she lives above the poverty line.   This is an example of how a living wage would work.

14.          In response to Questions 6 and 7 of the Consultation Paper, CWP suggests that it be mandatory for the Government of Ontario to review the minimum wage annually to ensure that it continues to be set at a level that guarantees a decent living in compliance with its international human rights obligations and regional costs of living.   An annual review would allow for consideration of any unexpected disruptions to the cost of living.  We further suggest that the Government establish a mechanism for those working minimum wage jobs to contribute to these annual reviews, be it through public hearings within the legislature or another suitable mechanism that ensures the meaningful participation of those working in minimum wage jobs.

15.          In closing, CWP urges the Government of Ontario to adopt a living wage as the minimum wage in Ontario. If undertaken alongside a comprehensive poverty reduction strategy (with housing, childcare and tax subsidies, etc), the rate would only have to be increased enough to put the single adult over the LIM. We think this approach makes economic sense. And, more importantly, it’s a matter of human rights.