Dec 1, 2009

How high should the minimum wage be?


At the BC NDP convention over the weekend, Carole James reiterated calls for a $10 an hour minimum wage. While $10 an hour would certainly be better than the current $8 an hour (lowest in the country), I’m concerned that this campaign is stuck on a round number not what is adequate for improving the livelihoods of the working poor.

CCPA reports have argued in the past that the minimum wage should put someone working full-time, full-year at (and ideally, above) the poverty line (in this case Statistics Canada’s Low Income Cut-Off). The latest stats put the LICO in 2008 at $22,171 (before taxes) for a single person living in a city larger than 500,000 people. This translates into $10.66 an hour for someone working 40 hours per week, and $12.18 per hour for someone working 35 hours per week (based on 52 weeks, assuming some of this is paid vacation).

Even these figures are arguably way too low for someone living in a major Canadian city, like Vancouver, where the cost of living (housing, in particular) is much higher. Statscan does not calculate LICOs for big cities, but based on higher housing costs alone (say a $500 place in a smaller centre rents for $1,000 in the city, that is an extra $6,000 in after-tax income required) this adjustment would add another $4-5 per hour.

So, back-of-the-envelope, the minimum wage should minimally be about $11 per hour, and in Metro Vancouver, closer to $15 per hour. I think I just heard some small business owners spray their coffee across their desks (sorry about that). But the reality is that lots of people making much more than that have difficulty making ends meet; the basic standard for paid work should a wage that allows the working poor not just to survive but participate in society.

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