Raising low-wage workers out of poverty: What is the government doing?

| August 21, 2013
Photo: Bob Simpson/flickr

That there has been a dramatic rise in the number of working poor in Canada is incontestable. In 2013, one in ten Canadians earn minimum wages, more than double the number ten years ago; half of those workers are in Ontario. A recent study conducted jointly by McMaster University and United Way Toronto found that barely half of all workers in the GTA-Hamilton area are employed in permanent full-time positions that provide benefits and a modicum of job security.

The explosion of precarious or insecure employment and the subsequent growth in income inequality are the result of both long and short-term changes in the labour market. The outsourcing of good-paying manufacturing jobs to the developing world, the expansion of the low-wage service sector, reckless Wall Street spending and the assault on unions have all contributed to the current plight of the working class. But also important is the erosion of state support for collective bargaining and basic employment protections.

Governments at all levels have abdicated their responsibility to balance corporate and worker interests to maintain a healthy and balanced economy. The consequences for workers -- in the form of shrinking wages, increased job insecurity and declining health -- have been disastrous.

It is with cautious optimism then that we should greet recent municipal, provincial and federal-level efforts to address worker poverty and income inequality. On July 19, Toronto City Council voted 28-3 to update the City's Fair Wage Policy. First established in 1893, the Fair Wage Policy requires contractors and suppliers for the city to pay their workers the prevailing market wages and benefits in their field of employment or, for unionized fields, union rates. The policy was designed to protect workers from unscrupulous contractors trying to underbid their competitors by paying their workers less than the prevailing wage rates, and to enhance the city's reputation as an ethical employer. However, because the rates had not been updated since 2003, until last month many of the city's "fair wages" fell below the Ontario minimum wage of $10.25 an hour.

The July 19 vote to update the fair wage rates reveals that a majority of councilors understand that is bad policy for the city, as an employer, to add to the growing ranks of the working poor (this excludes councilors like Denzil Minnan-Wong who sees as any kind of wage control as "social engineering") Under the new rates, contractors providing janitorial services for the city must pay their workers at least $12.43 an hour. Cleaners in the private sector in contrast almost always earn minimum wages.

Unfortunately, however, a fair wage is not a living wage, which the Canadian Centre for Policy Alternatives estimates to be $17.76 an hour in Toronto (a living wage covers the cost of basic necessities such as shelter, food, clothing and transportation). The city's fair wage rate for cleaners would barely raise a worker out of poverty and, if she or he were supporting a family as is often the case, would in fact leave them in poverty. This then is only a first step if the city truly wants to be an ethical employer.

On July 19 City Council also agreed to devise a "job quality assessment tool" against which any jobs being contracted out would be measured. The basic idea behind this initiative is to ensure that the city is not turning good jobs into bad jobs through the contracting-out process. As well as considering wage levels, the tool will include other criteria such as worker health and safety, skills and training opportunities, working conditions and other factors which determine job quality. Ideally, the job quality assessment tool, which will be considered by Council at the end of this year, will provide some protection for city workers who will no doubt face another round of privatization pressure as Mayor Ford runs for re-election in 2014. How successful this initiative will be depends on whether workers and their unions are given a voice in its formulation and implementation, and it’s not yet clear if they will be.

At the provincial level, the Wynne government recently announced the creation of a minimum wage advisory panel that will consider how to calculate increases to Ontario's minimum wage. The six-member panel, chaired by University of Toronto Industrial Relations and Human Resources professor Anil Verma includes representatives from labour, business and youth, the latter of whom are disproportionately represented among low-wage and precariously employed workers.

The minimum wage in Ontario has been frozen at $10.25 for the last three years, and will remain so for at least the next six months as the panel conducts public consultations and studies how other jurisdictions calculate minimum wage rates. Anti-poverty activists are justifiably angry that it has taken the Liberals more than two years to set up the panel, and wonder why, unlike many other provinces, Ontario does not provide automatic annual minimum wage increases pegged to inflation. Ontario Labour Minister Yasir Naqvi's assertion that we need a "made-in-Ontario" solution raises more questions than answers.

Yet once again there is reason to be hopeful that this initiative will help low-wage workers, many of whom are newcomers to Canada climb out of poverty and contribute to the economic recovery we so desperately need (remember, low-wage workers tend to spend every cent they earn in the local economy). The panel will most certainly recommend a wage increase and, perhaps just as importantly, develop a more predictable formula for raising the minimum wage in the future (in the past this has been done on an arbitrary, ad hoc basis that resulted in a nine-year wage freeze under the Conservatives). Only time will tell whether the panel’s political masters, whoever they might be next spring support a progressive overhaul of the system.

Despite the chilly climate for workers on Parliament Hill, there may also be reason to hope for change at the federal level. Next spring NDP Member of Parliament for Toronto Davenport Andrew Cash will introduce a private member’s bill to expand EI access to part-time and self-employed workers and to eliminate the use of unpaid interns. Cash has a personal as well as professional interest in the issue as someone who spent most of his adult life precariously employed in the creative sector. His bill would modernize a program that no longer reflects the employment realities of many Canadians, and make it harder for employers to engage in unethical and often illegal practices such as hiring workers as "independent contractors" so as to avoid obligations under employment law. It would also reform a pension system that currently consigns large numbers of elderly Canadians to poverty.

Cash understands that legislative changes to EI are only part of the solution. He envisions a multi-pronged approach that includes affordable daycare (along the lines of Quebec), social programs to fight poverty, and decent and affordable public transit. While the chances of Cash's bill passing under a Conservative government are next to zero, his laudable initiative has the potential to start a public dialogue about how the EI system is failing Canadian workers. It is also, as Cash explains, an issue which "spans the employment silos and class divides" that traditionally divides workers. His bill has the potential to mobilize a broad cross-section of the working class, from journalists to taxi drivers to computer programmers. Its long-term success depends in large part on whether this mobilization takes place.

Together, these initiatives reveal that government (or at least some within government) is finally beginning to heed worker and progressive demands for action that will stem the alarming growth of job precarity and worker poverty in Canada.

It is far from clear whether any of these initiatives will lead to real change for workers, but collectively they suggest that at least some of our elected officials understand that government has a stake in creating a more equitable society.   

 

Jenny Carson is Associate Professor in the Department of History at Ryerson University.

Photo: Bob Simpson/flickr

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