The time is now: We can no longer wait to act on poverty and the minimum wage
N.L.'s minimum wage is several dollars below what has been pegged as a living wage. Why?
It has often been said that the COVID-19 pandemic has exposed the fragility of our economic system and the inequalities that are inherent in it. It has also exposed the precarious nature of how a lot of people live in the contemporary world.
This has sparked conversations about whether governments should provide a universal basic income to all citizens. There have also been questions regarding whether the Canada Emergency Response Benefit is too large, and if the minimum wage is too low.
In Newfoundland and Labrador, minimum wage and poverty reduction recently became important issues in the Liberal leadership contest.
Premier-designate Andrew Furey ran on tying minimum wage to the Consumer Price Index so it would automatically go up when the cost of living goes up.
He also announced during the campaign that he would renew the focus on reducing poverty across the province. He said that he will address the complex roots of poverty and that he will undertake robust consultations to take a multifaceted look at the problem.
These are good things. However, it must be acknowledged that the minimum wage in Newfoundland and Labrador is not a living wage. This means it is not enough money for someone who works 40 hours a week to pay for basic expenses such as rent, utilities and groceries.
It must also be acknowledged that we already have enough information to know that poverty is a very real problem in this province and that it must be addressed immediately.
Many among us don't earn a living wage
The minimum wage in Newfoundland and Labrador is $11.65 an hour. It is set to reach $12.65 plus a national CPI bump in October 2021. The goal was to be more closely aligned with the minimum wage in the other Atlantic provinces.
The advocacy group Fight for $15 & Fairness estimates the living wage in this province to be $18.85 an hour. This raises the question of why a living wage is not seen as a basic human right and codified in law.
An estimated 70,000 people in this province (or 13.4 per cent of the population) earn the minimum wage. Women make up 57 per cent of minimum wage earners in Newfoundland and Labrador.
Approximately 30 per cent of the population earns $15 or less per hour. That is almost one-third of the population.
Ontario and Alberta have already increased their minimum wage, to $14 and $15 respectively.
Contrary to traditional arguments, minimum wage helps boost the local economy because the money is almost invariably spent at home. It boosts tax revenue and reduces the cost of social programs.
As a society, we need to get past the idea that minimum wage is something paid to teenagers and students who need pocket money.
Economic shifts have not much helped ordinary workers
The economy has shifted in powerful ways since the 1980s, with most of the job creation in service sectors. We are now living in a world in which Walmart is the largest employer globally.
We are also living in a world in which Amazon CEO Jeff Bezos's net worth recently jumped $13 billion in a single day. This represented the largest wealth increase in a single day since the Bloomberg Billionaires Index was created in 2012.
Service sectors are the fastest-growing industries in the world. However, they frequently pay their employees less than a living wage. Notably, Walmart and Amazon employees were deemed essential during the COVID-19 lockdown.
Of course, any increase in the minimum wage should also be accompanied by tax cuts for small business. We absolutely must to do a better job of supporting local businesses.
In the age of the gig economy, many people are being forced to choose the self-employment route. This year has shown us how precarious employment with a small business can be.
Our leaders also need to recognize that there is a big difference between locally owned small businesses and multinationals such as Walmart or McDonald's.
Often these big businesses come in and crush local businesses. They achieve large corporate profits while their employees live in poverty and rely on government programs, with few to no benefits.
A study using 2016 census data in Canada found that 1.7 million Canadians (8.2 per cent) were working in the gig economy. It would be valid to assume that number is growing.
How to stimulate an ailing economy
In 2017, it was determined that poverty was on the rise in Newfoundland and Labrador. It was also found that there was a lot of hidden poverty that the statistics simply could not capture.
The numbers would be higher if they included people who do not file tax returns.
Front-line service providers have said the statistics do not align with the number of people they are seeing who need help.
In 2019, there were 32,600 beneficiaries of income assistance in Newfoundland and Labrador. Even though the numbers have declined throughout this century, they have been relatively consistent over the last three years.
Certainly, we have seen positives, such as a reduction in the income tax paid by low income earners in 2018 and again in 2019.
There have also been expansions of programs such as Newfoundland and Labrador's prescription drug program, funding for women's centres, and the introduction of a wage subsidy program.
However, the reality is that what our citizens really want is a living wage. People want an opportunity to earn a fair living more than they want charity or government programs for low income earners.
It is almost impossible to break out of the cycle of poverty when most of the jobs are being created in areas that do not pay enough money for families and individuals to live on.
We know that a living wage is one of the best ways to stimulate our ailing economy and combat poverty.
We must also get to a place where it is seen as a human right.