Measuring “Improvement”: Minimum Wage and Living Wage

How much money we make is important to us personally because our wages directly impact our lifestyle, happiness and health. Income is also important to the provincial economy in general because having adequate and stable household employment and income lets families buy goods and services. This spending keeps our economy strong. So being able to make a decent wage matters to each of us, but it also matters to everyone.

Average weekly earnings in Manitoba rose by 10% between 2011 and 2016 compared with 9% in Canada. This means that Manitobans fared generally well during this period.

Having growth in overall income is one thing, but we here at Value Manitoba are also specifically concerned about the economic security of the lowest income earners. That means we need to pay attention to two specific aspects of income: the minimum wage and the living wage.

Minimum Wage

In Canada, provincial governments are responsible for legislating a minimum wage that employers are obliged too pay their workers. This is an important way to protect low-wage workers against being paid even less.

Here’s how comedian Chris Rock describes minimum wage:

I used to work at McDonald’s making minimum wage. You know what that means when someone pays you minimum wage? You know what your boss was trying to say? It’s like, “Hey if I could pay you less, I would, but it’s against the law.”

One way to measure economic progress is to look how households with the lowest income are faring. The minimum wage in Manitoba will be an interesting indicator to watch.

The minimum wage increased to $11.00 in October 2015, up from $10.70 in October 2014. Manitoba saw increases in the minimum wage each year between 2001 to 2015: it has increased by 80% during this period. This chart shows where Manitoba currently sits compared to other provinces:

min_wage_map

The Pallister government has said it will not increase the minimum wage in 2016. This means that the minimum wage will actually decrease by the rate of inflation. Here’s how that works: “inflation” means that every year, prices will go up – that’s just what prices tend to do. But when wages stay the same, every dollar you make lets you buy less stuff because the stuff has gotten more expensive.

Living Wage

Minimum wage is a legislated protection against being paid even less. It’s usually pretty low, and many people making minimum wage live in poverty. This is where the idea of the “living wage” comes in: it’s what people need to make, based on where they live, to be able to meet their basic needs. Living Wage Canada argues that minimum wages should be set a level that raises families above the poverty line.

As described in this article (PDF), living wages can be achieved through wages alone, or through a combination of wages and other benefits  provided by employers or by governments. The minimum wage is part of what might provide a living wage, assuming there are strong additional support programs in place.

Because the cost of living varies depending on where you live, so to does the living wage. For example, in 2013 the living wage in Winnipeg for a family of four with two parents working was $14.07 /hour and in Brandon it was $13.41.

Researchers are now working to calculate the current living wage and we will update this post once the numbers have been crunched. It will be important to use the living wage as a yardstick to determine how government programs enhance family income thereby reducing the rate by which employers will need to pay their workers to ensure they are earning a living wage.