It's difficult to find fault with the sentiment underlying Vancouver Mayor Gregor Robertson's plans to make his government a "living wage" employer.
Income inequality is one of the dominant and persistently troubling issues of our times. The gap between rich and poor continues to grow at precipitous rates. In a province as wealthy as British Columbia, and in a city as costly as Vancouver, the number of people living at or below the poverty line is inexcusable. Once upon a time, the notion that people wouldn't be paid enough to maintain an adequate standard of living was inconceivable.
"No business which depends for existence on paying less than a living wage to its workers has any right to continue in this country," U.S. President Franklin Roosevelt said in 1933. How things have changed.
A living wage is broadly defined as a salary (hourly or otherwise) necessary to provide a family of four with the essentials of life; or, to put it another way, to exist just above the poverty line. It does not include, for instance, money for credit cards, loans, interest payments or retirement and education funds.
In B.C., the Living Wage Campaign has spearheaded efforts to get a small but growing list of employers to join the movement, including Vancity credit union, the Canadian Cancer Society and the city of New Westminster. The Canadian Centre for Policy Alternatives says the current living wage in Metro Vancouver is $20.68 an hour, a rate that will undoubtedly be higher when the City of Vancouver, if all goes according to plan, institutes its new policy in two or three years' time.
(The current minimum wage in B.C. is $10.25 an hour, scheduled to go up by 20 cents in September.)
In practical terms, Vancouver's edict is not likely to impact the city's 6,000 employees, most of whom are unionized and make above the current living-wage rate.
Those who will be affected are independent, mostly non-union firms that do work for the city but do not pay their workers the living-wage minimum.
In future, if they want to retain their contracts with the city, they will have to pay their employees more money. And what are those companies likely to do in return? Pass along the cost of their payroll increase to their customer, the City of Vancouver.
This phenomenon prompts us to consider one of the many contentious aspects of the living wage/minimum wage debate: Is it in the best interests of the greater good?
Jock Finlayson, executive vice-president of the Business Council of British Columbia and one of the top economists in the country, says he sympathizes with what proponents of a living wage are trying to achieve.
"[However] I think it is problematic for a taxpayer-funded body, such as the City of Vancouver, to pledge to eschew future efforts to identify and contract for outside services/goods at the lowest cost to taxpayers," said Mr. Finlayson in an interview.
"Stated bluntly: Who is looking after the interests of Vancouver taxpayers in this case?"
As well, if the City of Vancouver chooses, as a matter of policy, to impose higher costs on itself in terms of the future expenses procuring goods and services, on what basis can it then turn to governments in Victoria and Ottawa and plead poverty as the city is prone to do, Mr. Finlayson wonders.
There are other concerns, too.
In looking at the impact that raising the minimum wage or establishing a living wage has on the economy, it is often difficult to skirt basic laws of nature. If the cost of employing a worker goes up without a corollary increase in productivity (and revenue), then logic dictates a company will look for ways to reduce the use of labour to reduce its financial overhead in an effort to restore bottom-line numbers that existed prior to the payroll hikes.
Dozens of studies have borne this out. They have also revealed that in many cases employees earning minimum wages don't belong to households living beneath the poverty line.
So there is certainly an argument that what the City of Vancouver is pushing for is, at worse, a deeply flawed concept that will do more harm than good and, at best, an expensive feel-good plan that will only offer relief to a small group of people. That said, the public may be willing to accept the proposal because there is no such thing as a perfect solution to this problem; any potential fix will always come with trade-offs.
I think a growing number of politicians understand there is, increasingly, broader public support for measures that address the income-inequality issue. It's why Premier Rachel Notley didn't hesitate to announce she'll raise Alberta's minimum wage to $15 an hour within three years. It's why dozens of communities in the U.S. have joined the living-wage crusade.
Could we be witnessing the beginnings of a modest income-inequality correction? It's early, but the sample size is growing.
Gary Mason