The case for a living wage — a social contract and moral imperative

This is Living Wage Week, part of a campaign to encourage employers to pay a wage that is significantly higher than the legal minimum. Recently I highlighted the negative impact of inequality. One of the ways to increase equality is through reducing income difference before tax by increasing minimum wages or through a ‘living wage.’

Recently, the provincial government announced that the minimum wage would remain at $14 for the next two years. While expected, this announcement is not good news for the people working at jobs that typically pay a minimum wage; jobs in the retail, food services, and hospitality sectors.

Minister of Labour, Laurie Scott, stated that the best way to lift people out of poverty was through a job. While there is some truth to this statement, a job that pays minimum wage does not ensure a decent life. You probably don’t have to go far in your circle of friends or family to find someone working at minimum wage full-time struggling to make ends meet.

A living wage, on the other hand, is community based and calculated as the hourly rate required so that a household can meet its basic needs, once government transfers have been added to the family’s income and deductions have been subtracted. Having worked on the calculations for my community I know that the costs reflect a modest lifestyle. Using public transit is expected in communities where the infrastructure exists, a vacation consists of camping and internet and phone costs reflect basic packages. This is hardly extravagant living.

High costs of internet, hydro, and transportation in my community mean that, at $19.42 the living wage in Haliburton County is one of the highest in Ontario, second only to Toronto. It is clear that it takes much more than a minimum wage of $14 for a worker to pay for the basics of life.

Political science professor Charles Smith suggests that entrepreneurs need to consider paying a living wage before they open their business. “For a business to not compensate that labour at a fair price raises the question of whether it is ethical for it to operate in the first place.” Smith shifts the conversation away from strictly economics to the need to recognize the humanity of all workers who deserve dignity and respect.

We often hear the argument that small businesses cannot afford a living wage. In 2016, Josie Rudderham and Nickey Miller, the owners of Cake and Loaf Bakery in Hamilton paid their employees a living wage. They called it a “moral imperative.” This thriving neighbourhood bakery has 26 employees and has expanded to include a stall at the local farmer’s market. In answer to the question of whether small businesses can afford to pay their employees a living wage the Cake and Loaf Bakery would say ‘yes.’ Starting the bakery with her partner, Rudderham “wanted to provide meaningful employment for people – jobs people could stay at and still have families and still go on vacations and still buy houses.”

For a local perspective I met with Brian Nash of Haliburton Wind and Solar. Brian has been a business owner for many years and he established Haliburton Wind and Solar in 2012.

As an employer Brian sees his role as part of the creation of a vibrant local economy; a place where people work, live and spend. He spoke about business contributing to a society that supports well-being. Brian expressed the idea that if you offer your employees a way to contribute, and pay them according to their worth, your business benefits from greater stability and success. Staff is more inclined to stay with an employer when they are able to fulfill their needs for meaningful work and economic security.

Brian supports a living wage. He knows from experience that when employees are valued they have a greater sense of ownership and are willing to contribute to the business’s success. Paying a living wage is a concrete way to value staff, but Brian recognizes that nurturing a relationship in which employees feel free to offer their ideas is also important to meeting business goals.

The living wage movement is growing and members of the Ontario Living Wage Network and the Better Way Alliance embrace the commitment to valuing employees because it is a smart investment. There is a convincing economic argument for a living wage, but consider the role of a living wage in shaping a more inclusive society. In The Case for Increasing the Minimum Wage, author David Green raises the idea of a social contract:

“There is a sense in which the functioning of the labour market represents an important social contract to which we are all signatories. Part of that contract says that if people work, and work hard, they should expect that their share of the final product will allow them to live a life of dignity. A wage structure with substantial inequality that includes people working full time but still ending up in poverty breaks that contract. The result is a society that does not function well, that turns on itself and breaks into groups, that is not as good a place to live, for anyone.”

A living wage can help people feel that they are a part of the fabric of their community.  All of us can play a role. As a citizen and consumer you can patronize and promote the companies and organizations that pay a living wage. As a business owner, budding entrepreneur, or organization leader you can commit to paying a living wage. It is the right thing to do.