The problem with having to live while earning less than the living wage is that it is very stressful. Families living on less than a living wage have to face hard choices: for example, paying the rent, or feeding the children, or heating the house. Poverty remains a huge problem in Manitoba even though the economy is growing and the province has low unemployment rates.
Living wage is different from minimum wage. Minimum wage is the legal standard set by the province and must be followed by all employers. Living wage ensures that a parent’s full-time work (35 hours a week) should yield economic stability to their families so they can meet their basic needs.
According to the Canadian Centre for Policy Alternatives (CCPA), the living wage required for a family of four with two parents and two children in Winnipeg is $14.07/hour, as calculated for the year 2013. Winnipeg’s living wage increased by 4.7 per cent from 2009 to 2013, but Winnipeg’s inflation rate from 2008 to 2012 was 5.8 per cent. The fact that the inflation rate is higher than the growth in living wage should be a cause for alarm.
The reasons for having a living wage are simple.
There is plenty of research indicating that growing up in an engaged and supportive environment leads to good health and general well-being in the long run.
The issue here is that low-income parents have a hard time providing such an environment. Children coming from low-income families typically have lower rates of literacy and perform poorly at school. As adults, they often lack job security, are underemployed, and have health-related issues.
Low income also results in absenteeism, which is estimated to cost Canadian employers around $4.5-6 billion per year.
Research done by the CCPA indicates that there are positive effects from paying living wage. It reduces absenteeism and staff turnover, increases morale and productivity, and lowers training costs. These are incentives for employers to pay according to the costs of living for a family. If employees do not feel as though they are in a constant struggle to make ends meet, they will perform better at their jobs.
Living wage is not a new idea. For example, in 1948, the United Nations General Assembly’s Universal Declaration of Human Rights suggested that every human being who works is entitled to receive a wage that is in tune with human dignity and respect.
The problem of being paid below living wage is not solely the responsibility of the private sector, nor of the public sector. Government cannot fix the problem by itself. Both sectors have to work together and ensure that everyone is paid a living wage so it is not a constant struggle for families.
Government policy that maximizes utility is the best option. The idea here is to boost general welfare and also to be socially progressive. Higher real wages offered by employers, transfer payments like government benefits, and tax cuts stimulate the economy. It makes sense because lower income families will spend more money, therefore increasing tax revenue and increasing business profits. It is a win-win for everybody involved.
There are always winners and losers with any government policy, but eliminating poverty is the right thing to do.