Corporate social responsibility means paying a living wage

Making paid work meet basic family needs
September 30, 2008

Families who work for low wages often face impossible choices: buy clothes or heat the house, feed the children or pay the rent. The result can be spiraling debt, constant anxiety and long-term health problems. In many cases it means parents are working extremely long hours, often at two or three jobs, just to pay for basic necessities. They have little time to spend with their family, much less to help their kids with schoolwork or participate in community activities.

In BC, the contradiction between a strong economy and growing economic insecurity is especially stark. For five years running, BC has had the highest child poverty rate in Canada, and we are the only province where child poverty rates were actually higher in 2006 (the latest year for which we have data) than in 1997. The story of child poverty is very much a story of low wages. More than half of BC’s poor children live in families where at least one person works full-time all year.

Something is not right when families are doing all the right things, yet still struggling to meet basic needs.
A living wage is one of the most powerful tools available to address this troubling state of poverty amid plenty. For those employers who purport to be committed to ending child poverty, this is truly where “the rubber hits the road.”

A living wage is not the same as the minimum wage, which is the legal minimum employers must pay. The living wage calls on public and private sector employers to meet a higher test, for both their direct staff and their main contractors. It reflects what a family needs to bring home, based on the actual costs of living and raising children in a specific community. It would allow families to: escape poverty and severe financial stress; ensure healthy child development; and participate fully in their communities. However, it is also a reasonable and conservative estimate.

Our recent report, Working for a Living Wage 2008, calculates what the living family wage is for both Metro Vancouver and Greater Victoria. The calculation includes basic expenses for a two-earner family of four with two young children (such as housing, food, clothing, child care and transportation), and also incorporates government taxes (income and payroll), credits, and subsidies (such as the Canada Child Tax Benefit). It assumes both parents are working full time.

But the living wage is also a conservative, bare-bones budget without the extras many of us take for granted. For example, our calculation does not include money for debt or interest payments, or for retirement or post-secondary savings (RRSPs or RESPs), and the amounts for recreation and emergencies are very modest.
The bottom line: the living wage in Vancouver is $16.74 an hour, and $16.39 in Victoria.

Importantly, our living wage calculation is also enough for a single parent with one child, although a single parent with two children would have a much tougher time.

Living wage movements have been gaining ground over the past 20 years across the US and the UK, and in a number of Canadian cities.

In 2004, the Mayor of London responded to broad public pressure by agreeing to annually set an official living wage figure for the capital. All workers employed by the Greater London Authority – either directly or on contract – are paid at least that amount. And even London’s new Conservative mayor declared that paying the living wage is good for business, and good for the London economy.

A growing number of leading UK corporate employers now see the benefits of paying living wages, including: HSBC Bank, Morgan Stanley, City Group, Deutsche Bank, Royal Bank of Scotland, KPMG, Price Waterhouse Coopers, four East London Health Trusts, Queen Mary University and the London School of Economics. And, significantly, the 2012 London Games will be the first living wage Olympics. The Olympic Delivery Authority has guaranteed that no job on the site, either before or during the games, will pay less than the London Living Wage.

Some of these employers were reticent at first, not just about paying a higher wage, but about taking back responsibility for workers they had contracted out. But as with other areas of corporate social responsibility, most have found important benefits to becoming a living wage employer:

  • Significant advantages in recruitment and retention, and reduced absenteeism;
  • Higher productivity and morale; and
  • The benefits of being able to market oneself as a living wage employer.

The living wage is not just about employers, however. The labour market alone cannot solve all problems of poverty and social exclusion. Government policies and programs also have a direct impact on our standard of living, and as a result, on the living wage itself.

First, direct government transfers can put money into the pockets of low-income families. The more generous these transfers are, the less a family requires in wages to achieve a decent standard of living. However, most government transfers and subsidies (such as the Canada Child Tax Benefit, the GST credit, and BC’s child care subsidy program and rental assistance program) are reduced or eliminated once a family reaches an income level well below the living wage.

The living wage is also affected by public services and infrastructure that shift certain costs off the shoulders of individual families. For example, if we had a universal public child care system for children under six years old, the living wage calculation would no longer have to include over $600 per month in child care costs. Increasing the stock of affordable housing, or making public transit more affordable, would likewise decrease the amount employers need to pay in order to provide a living wage.

If employers feel unable to pay the living wage, but remain committed to ending child poverty, then they should become advocates for policy changes than enhance government benefits to low-income earners and the public services that improve our quality of life.

Adrienne Montani is Provincial Coordinator at First Call: BC Child and Youth Advocacy Coalition. Seth Klein, Deborah Littman and Tim Richards along with Marcy Cohen are the authors of Working for a Living Wage: Making Paid Work Meet Basic Family Needs in Vancouver and Victoria – 2008, which was published recently by the Canadian Centre for Policy Alternatives, First Call, and the Community Social Planning Council of Greater Victoria.