Ending Working Poverty

End Working Poverty: Assuring Basic Minimum Wages

The Poverty Trap

Low pay and poor jobs keep too many people trapped in poverty in Ontario.

In 2004, 60% of parents and single adults living in poverty were employed but with insufficient earnings to live above the poverty line. (2006 Report Card on Child Poverty in Ontario)

In 2008, one-third of all Ontario children living in poverty (LICO-BT) were in families with full-time, full-year hours of work. (2010 Report Card on Child & Family Poverty in Ontario)

In 2004, the OECD reported that Canada, along with the United States, has the highest proportion of low-paid workers among the major industrialized countries in the world. (International differences in low-paid work)

Community Living Wages

Living wages are the moral foundation of a just economic order in which full-time labour enables earners to live at the moderate standards of adequacy and amenity prevailing in the community.

Local living wage campaigns are starting to establish what the appropriate hourly rates for a living wage are in various communities across the province (e.g. $15/hr in Hamilton [2010]; $18/hr in Toronto [2010] and $13.62 in Waterloo Region [2007]).

Poverty Free Ontario supports community living wage campaigns, which set important benchmarks for an inclusive community that values and fairly compensates the labour of its workers.

Basic Minimum Wages

Necessarily, community living wage campaigns are setting wage standards well above the current Ontario statutory minimum wage of $10.25/hour.

While acknowledging that an adequate minimum wage will not be equivalent to a community living wage, Poverty Free Ontario asserts that the “basic minimum wage” should ensure that the full-time (35 hours per week), full-year earner lives at least 10% above the poverty line.

To accomplish this goal, Poverty Free Ontario proposes that the Ontario Government continue its previous successful practice when it gradually increased the minimum wage from $8.00 to $10.25 over three years from 2008 to 2010.

A further series of three annual 75 cent increases starting in March 2012 would bring the basic minimum wage to $12.50/hour in 2014, enabling the minimum wage earner to live about 10% above the poverty line.

After achieving this benchmark in 2014, the basic minimum wage should be indexed thereafter.

Two Tests of Business Viability

Opponents of higher minimum wages claim that they are “job-killers”, although research in both the UK and the US indicates otherwise.

It is not unreasonable to expect private enterprises to meet two tests for success in their areas of business:

  1. the economic test – the ability to recover costs and generate a surplus in a manner consistent with environmental sustainability; and
  2. the social test – the ability to pay a basic minimum wage in a safe and respectful work environment.

As long as all enterprises are competing on a level playing field when it comes to minimum wage requirements for their labour, those that are most efficient and effective in their operations will prevail, which is the central dynamic of a strong market economy.

It is unfair to expect workers to subsidize the economic viability of business by sacrificing returns on their labour, which keep them in poverty and threaten their health and well-being.

Stronger Wage Protection

Poverty Free Ontario supports the position of the Workers’ Action Centre (WAC) calling on the Ontario Government to end “wage theft” in Ontario. www.workersactioncentre.org/campaigns_stopwagetheft.html

WAC research shows that many workers are exploited in the labour market, not paid even the current inadequate minimum wage, nor for overtime work, and are subject to other unfair and discriminatory employment practices.

The Government of Ontario must develop rigorous employment standards and preventive enforcement strategies which eliminate chronic violations and labour market practices that deny workers fair compensation for their labour.

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