2010 Work should lift you out of poverty, not keep you there

2010

Work should lift you out of poverty, not keep you there.

What is a ‘Living Wage’?Different from minimum wage Not legislatedSingle vs. family Based on actual expenses and gov’t benefits/taxes in a given community The living wage call: to employers (primarily large public and private sector) to commit to LW for both direct staff and major local service contracts


The Poverty ContextFor 6 years in a row, BC has had the highest child

poverty rate in Canada (13% in 2007, after tax)

56% of poor children in BC live in families where at least one adult works a full-time/full-year job.

Of 27 factors identified as having an impact on child development, up to 80% were seen to improve as family income increases

Corporate social responsibility means paying a living wage. For those who want to end child poverty and ensure healthy child development, this is where “the rubber hits the road”


Process1. Brought together a group of academics, policy

analysts, social partners and advocates to set a living wage

2. Outreach to stakeholders through roundtables: Dietitians of Canada, United Way, SPARC BC, Vibrant Surrey, Faith Groups, Labour Unions; Immigrant Communities.

3. Focus groups with low income families and employers to receive feedback on:

- assumptions in the calculation- the amount of the Living Wage


PrinciplesEnables working families to have an adequate but

not affluent income;promotes social inclusion;supports healthy child development principles;promotes gender equality;ensures that families are not under severe

financial stress;is a conservative, reasonable estimate;engenders significant and wide ranging

community support; andis a vehicle for promoting the benefits of social

programs such as childcare


Assumptions and Methodology The Living Wage is calculated for a family

of two parents and two children, aged 4 and 7 years;with paid employment for seventy hours per week;estimated family expenses for 2009; andthe four year old child in full time day care, 7 year

old in before and after school care and summer care.

Government transfers and taxes based on the 2009 tax year.

The family expenses are based in part on the HRSDC Market Basket Measure.


Formula:

AnnualFamilyExpenses

= Income fromEmployment(Living Wage)

+ Income fromGovernment Transfers: CCTB, UCCB, GST, Child Care Subsidy

- EI PremiumsCPP PremiumsFederal TaxesProvincial Taxes

Thus, the living wage is the hourly rate of pay at which a household can meet its expenses once government transfers have been added and government deductions from wages and government taxes have been subtracted.


Family ExpensesFoodClothing & FootwearShelter ChildcareTransportationOtherMedical ExpensesParent EducationContingency Amount


Food

$174/week $756/month$9,071/year

Source: Dietitians of Canada: The Cost of Eating in BC 2009


Clothing & Footwear

$187 / month $2,240 / year

Source: MBM (2007) + CPI


Shelter$1,346 / month$16,152 / year

Shelter = Rent + Utilities + Telephone + Content Insurance

Rent: $1,175 / month

Calculated based on CMHC October 2009 data for median rents for apartments, 3 bedroom units.

Median rent is lower than the average rent.

Rents vary, in Vancouver in the CMA closer to $1500, $900 in the Fraser Valley

New condo rent for 2 bedroom in the CMA is $1435.00 / month.


Utilities, Telephone, Contents Insurance

$171 / month (= $104 + $37 + $30)$2,052 / year

Utilities = Electricity: = $104.00 / monthSource: Dietitians of Canada “The Cost of Eating in BC 2007”, Stats Can

custom tabulation plus CPI

Telephone: = $37.41 / monthSource: A land line phone through Telus

Contents Insurance on Possessions: = $30.00 / monthSource: Based on estimate from VanCity of $300-$400 yearly to insure

$30,000 worth of possessions


Transportation $442 / month

$5,309 / year

Transportation = A Car + Public TransitA CarThis expense is the MBM amount adjusted by CPI.

This amount is for the purchase (amortized), insurance, maintenance and operation of a second hand vehicle.

Public Transit1 Adult Pass (2 zone): $ 99.00

Source: Greater Vancouver Transportation Authority


Everything Else

The “Other” category of the MBM is a general category that encompasses a variety of expenses including personal care, household needs, furniture, school supplies and a very modest levels of reading materials, recreation, entertainment, internet, cable, and family vacation.

$159/week $689/month $8,269/year


Family Expenses: Childcare$1,095 / month$13,150 / year

For: full time care for the 4 year old, and before and after school care and summer care for the 7 year old.Source: Westcoast Childcare Resource Centre

This expense account for over 20% of the family’s expenses.


Medical Expenses Medical expenses has the following two parts.

1. MSP Premiums$114 / month$1,368 / year

2. Non MSP Covered Health Care Expenses$133.00 / month$1,596.00 / year

This amount is based on the cost of Pacific Blue Cross Insurance for the family.


Parent Education

$1,050 / year This amount allows a parent in the family to

take two courses of three credits each at a community college.

It covers expenses for tuition, textbooks and student fees.


Contingency Amount

$2,549 / year

The contingency amount equals the hourly wage of the parents x their number of hours worked per week for each parent (35), for two weeks.

The contingency amount is for unexpected expenses such as being away from work to care for a family member, any out of town travel, transition between work or the two week waiting period for employment insurance benefits.


Total Family Expenses

The two parent / two child family with the expenses presented above has family expenses of

$5,062 per month, or $60,749 per year

This family needs to earn $66,139 before taxes and transfers.


Living Wage

= $18.17 per hour

for Vancouver, based upon the above family expenses, and factoring in government transfers and government deductions.

($17.31/hour for Victoria)


Not IncludedThe Living Wage does not allow the family to own a house;save for retirement;save for their children’s education; orservice debt.

The recreation/entertainment budget is very modest, as is housing and contingency.


How can employers become ‘Living Wage Employers’?

Pay all direct staff (FT, PT and casual) the living wage.LW can be attained by a combination of wages and

benefitsYou must commit to insert a Living Wage clause

(stipulating that contracted workers be paid a Living Wage) in all future contracts for external staff, who provide services to your organization on a regular ongoing basis, but who are not direct employees.

Employees paid by incentive-based pay (tips) or commission can be paid less than a Living Wage (once wages + tips/commission=LW)

Advocate for public policies that would enhance affordability and lower the living wage.

Key ConditionsExternally contracted staff refers to staff that

work on a regular ongoing basis (providing at least 120 hours of labour a year) that many businesses use to provide janitorial, security, cleaning or catering services. Ad hoc contract work (for example for repairs or maintenance) is exempted from this clause.

A Living Wage clause should be included in all future agreements and renegotiated agreements with contractors you hire. You do not need to renegotiate existing contracts before they come up for renewal in order to be compliant.

Key ConditionsNon-mandatory benefits include employer contributions

towards an employee’s health/dental care, MSP premiums, child care expenses, enhanced vacation and sick leave etc.

Employers are allowed to have a small amount of trainees or students placements that are paid below the living wage once they don’t represent a core part of the total staff makeup (no more than 10-20%). Staff who are on probation are not counted as part of the living wage determination process but once their probation period is over they must receive a living wage.

The Living Wage is calculated annually to take account of living expense changes and changes. LW Employers will be asked to be re-certified every 2 years based on the existing Living Wage figure at that time.

How do I apply? Fill out Enrollment FormApplication reviewed by the 'Living Wage Recognition

Body'. This body is made up of representatives from Business, Social Enterprise, Ethical Investment and Trade Unions

Signing Ceremony -Living Wage Pledge. LW Employer given sample living wage clauses for insertion into external contracts and a sample living wage internal policy (copies of these are available on our website) as well as window decal for store front display and an electronic logo for use on websites and letterhead.

You will be publicly recognized as a Living Wage Employer on our website and any of our periodic publications.

Future plans for Living Wage Awards Ceremony

Living Wage Employer Logo

Living Wage Employer Programme

Targeted 30/40 Employers.

8 signed up (2 Credit Unions, 1 Environmental Business, 1 Awards Company and 4 NGOs)

10/15 other organizations hoping to apply.

Partnership with SAP software

Hoping to launch the programme to the larger business community in the fall/winter of 2010.

Where has this happened?Over 130 US cities since 1994- New York,

Chicago, Boston, Detroit, Cleveland, Los Angeles, San Francisco, Oakland, San Jose and Miami

Greater London Authority, UKNew Westminster-April 2010-first in CanadaCanadian cities considering this approach

include Ottawa, Waterloo, and CalgaryCurrent US administration is considering

giving preference to contractors who pay a living wage in bidding for Federal contracts

Case Study-London2012 Olympics in London will be the first

Living Wage Olympics!Numerous companies signed up including

HSBC, Royal Bank of Scotland, KPMG, Price Waterhouse Coopers, Queen Mary University, LSE.

“Paying the London Living Wage is not only morally right, but makes good business sense too. What may appear to a company to be an unaffordable cost in a highly competitive market should more often be viewed as a sound investment decision. I believe that paying decent wages reduces staff turnover and produces a more motivated and productive workforce.”

Conservative Party Mayor of London, UK, Boris Johnson, 2008

Case Study - KPMG“So, for KPMG, paying the Living Wage is not just an important part of

our values, our people strategy and our award winning corporate

responsibility agenda: it’s critical.”

Ian Tew, Head of Workplace at KPMG, UK, 2008Turnover amongst our cleaning staff has more than halved.Morale has been raised.Despite improved sick pay potential abuse has not

materializedProductivity has improved; attitudes are more flexible and

positiveService has improved: our help desk gets far fewer

complaints


Documents

2010 Work should lift you out of poverty, not keep you there