Is the Minimum Wage a “Living Wage”?

When I started working about 15 years ago, I was paid about slightly above minimum wage, at $6.90 per hour. I worked at large clothing retailer, folding khakis and giving on advice on whether or not a customer looked best in “boot cut” or “loose fit” jeans. Since those halcyon denim days, I have noticed a steady and continual increase in the minimum wage rate in Québec.

Indeed, as the Commission des Normes de Travail helpfully outlines on its site, minimum wage has been steadily progressing from its institution at $4.35 per hour in 1986. As of May 1, 2011, the minimum wage in Québec is now $9.65 per hour (for employees who don’t make regular tips).

Across Canada, the majority of minimum wages rates don’t vary greatly – the lowest hourly rate is $8.00 in Alberta and the highest is $11.00 in Nunavut.

The historical purpose of the minimum wage was to ensure that employees who needed work weren’t taken advantage of and could “make a living” no matter their education level or type of work. It was historically intended to provide a “living wage”. Many say that current minimum wage rates are insufficient to allow to someone to live.

A full-time employee (37.5 hours) in Québec who makes minimum wage will take home $18,817.00 annually. After tax (using this very much unofficial tax calculator), they will net $16,449.30. At the high end, a full-time employee in Nunavut will take home $19,428.67 after taxes.

Is the minimum wage achieving its historical goal of providing a “living wage”? What do you think?

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Comments

  1. I think a living wage is needed especially in these times of economic uncertainty and globalization.

    An amendment to the UN International Covenant on Economic, Social, and Cultural Rights to include a living wage indexed to each nation’s economic conditions could do much to move towards a more leveraged playing field especially in addressing issues pertaining to outsourcing and jobs moving to countries with lower wages than those in the “developed” nations. Ideally, more families in the “developing nations” would be able to afford food and shelter, better health care and education for their children that could eradicate child labour. However, notably neither the United States nor South Africa has ratified this Covenant. Of course, I’m neither an international law expert nor economist so this is merely my humble opinion.

  2. “It was historically intended to provide a “living wage”.”

    Is there a citation for this? I’m not trying to be a troll, its just that everything I’ve ever read has indicated that the provision of a living wage was only one thing considered in setting the wage, along with other effects and purposes such as alleviating poverty and the effect on employers and the total number of jobs.

  3. Mike – I agree with your comments. Clearly other factors were taken into account when establishing the minimum wage. I still think that the mean reason for its institution was allow people to make something of a living (by not allowing employers to “bid down” when work is scarce).

  4. I do not believe minimum wage is a “living wage”, at least not comfortably. As a young student still doing an undergraduate degree I’ve had few jobs that paid higher than minimum wage. With rising costs of food, rent, gasoline, tuition,text books etc., I will never be able to pay for all my expenses by simply making minimum wage. I am dependent on the financial support of my parents. Minimum wage as an institution was created to secure class differences in society,that is for capitalism to function there must be a group of people that earn the lowest possible wage (or no wage at all). Minimum wage rises in order to keep up with the growing cost of basic necessities however, it only increases as much to secure class divide; minimum wage will never allow for the earner to earn a decent or somewhat prosperous living.

    What pisses me of is that I hear people say, “$10.25/hr(Ontario), thats good!” Compared to other provinces, yes maybe 10.25/hr is great however, you must question how the government came up with that number. By understanding $10.25/hr as good compensation to sell your labour, your accepting your place in society; poor and lower class! Regardless of how much the government raises minimum wage, it will always leave people who work for minimum wage poor and struggling.

  5. A single person may well be able to get by on minimum wage (if their rent isn’t too high and they don’t buy good quality groceries or eat out a lot… – If you don’t count tuition, I spent less than $20k last year and that includes a flight across Canada). But if there are other considerations (tuition, raising a family…) it’s not a ‘living wage’ at all.

  6. Surely a ‘living wage’ means ‘enough to keep from starving or freezing’ and not much more. Of course whether it actually does that depends on lots of things, including location. I expect that body and soul can be kept closer together for $10.25 an hour in North Bay or Smith’s Falls than in Toronto or Ottawa. And a lot of minimum wage jobs are also part-time jobs (usually fewer hours than the minimum at which employers would have to offer benefits as well as wages.)

    That said, I don’t believe that the minimum wage is intended to ensure that there is a lower class of wage earners available for exploitation, as stated by Holly Clark. Nothing requires minimum wage earners to stay at that level if they can increase their skills or find a place that will pay more. I suppose there must be data on how many minimum wage earners are students or other people intentionally temporarily at that level, rather than people who have no other long-term prospects.

  7. Gary Luftspring

    Doesn’t this whole discussion duck the real discussion which is whether our society should provide its citizens with a guaranteed annual income in order to live. If one goes back some years when this was actually studied by a commission I believe led by Donald McDonald. The arguments are compelling however as our country moves further to the right I believe that horse long ago left the barn

  8. I had thought that the barn had been so strongly barred and barricaded that the guaranteed income horse had simply died of starvaation. However, I read someone raising the issue again in the past few weeks (not as part of the election campaign, though.)

    One of the many challenges of the guaranteed income proposal is that of free riders. Why work or contribute if someone will pay you to do nothing? There is already resentment over abuse of social assistance by ‘welfare bums’ (though the cases of actual fraud are pretty rare).

    Another challenge is to ensure that the minimum wage is high enough to provide an incentive for someone on welfare to work if possible, and not to take away the benefits so fast that it does not make econommic sense to work.

    Another is to keep Canada being a sufficiently ‘rich’ country to be able to afford this discussion at all (‘we’re a rich country, no one here should live in squalor’ etc), given pressures of globalization, contracting out, hollowing out, and so on.

    All of those could be subject of considerable discussion here as they have been elsewhere. Is that where Gabriel intended us to go? (not that it’s his decision, once he turns the tap on …)

  9. I think John G. makes an excellent point when he states that the idea of a living wage must be tied to geography. It makes little sense to set an Ontario minimum wage. The cost of living in North Bay or Thunder Bay or Belleville is much different than the cost of living in Toronto. Legislatures need to be more responsive to this.

  10. Gary Luftspring

    No matter the system there will be abuse. Unforutnately it appears that as with various things we as a society spend more time dealing with the negatives than the positives. When one actually looks at the cost of the abuse v. the cost of enforcement one often finds some startling propositions. People should go volunteer at a food bank for a while and they will be shocked at the profile of the people in need. By and large people want to feel productive and useful. Is it not the obligation of a civillized society to enable them to do so. On a societal basis the costs of not providing a guaranteed annual income maybe much greater than doing so however you are right John I think these concepts have not been seriously debated since I was an idealistic teen many many years ago. Too bad. A much more interesting disucssion than building useless prisons to fight decreasing violent crime. Are my roots showing!

  11. There is also a matter of personal and household security. When the disparity between the haves and the have-nots becomes too great, there is motivation for the have-nots to resort to unlawful activity to “keep body and soul together”. The entry level activities include panhandling at red lights then escalate to breaking-and-entering then kidnapping and ransoms. Eventually we will imprison everyone and then we will need to fund the system by renting prisoners out as paid labour. And viola we are back to slavery.

    There is no guess-work or imagination required. We have examples all around the world of what a society without a living wage looks like. Canada is the control group.

  12. The PBS show Need to Know provides a very informative piece about forced labour, human trafficking and modern day slavery. Further reasons why the UN’s Covenant on Economic, Social and Cultural Rights should be amended and an indexed and defined living wage included. Go to: http://www.pbs.org/wnet/need-to-know/video/video-benjamin-skinner-on-the-world-of-modern-day-slavery/9951/