Social Policy

Minimum wage increase, minimal impact on poverty reduction

The jurisdiction with the nation’s highest cost of living will increase the hourly rate earned by its lowest paid workers from $11 to $13 on April 1, making Nunavut’s minimum wage the highest in Canada.

Legislators approved the increase in October after reviewing the rate as required under Nunavut’s Labour Standards Act. The rate was last increased from $10 to $11 per hour in 2011.

The government solicited public input into the change and “the few responses received were all in support,” according to a spokesperson from Nunavut’s department of Justice. Eighty businesses consulted by the government “overwhelmingly” supported the increase, as “almost all businesses were already paying $13 or more.”

The increase comes as Nunavut’s high rates of poverty and hunger are receiving national attention. Minimum wage legislation is one tool legislators can use to try to ensure that their residents’ basic needs are met. According to a report prepared by the Caledon Institute of Social Policy for the Nunavut Roundtable for Poverty Reduction in 2013, “Nunavut does well in relative terms with respect to its minimum wage” compared to the rest of Canada; however, “the value of the minimum wage in Nunavut does not reflect its true purchasing power, given the high cost of living in the Territory.”

In a normal housing market there is an incentive to pursue a higher paying job in order to move into better housing, but in most Nunavut communities there is no better housing available.

Another report, Understanding Poverty in Nunavut, prepared by Impact Economics for the Government of Nunavut in 2012, notes that income levels to qualify for income assistance “are close to what can be earned by one and two people working full-time at the minimum wage.” A Government of Nunavut website calls its income assistance program a “last resort” for people with no other form of income, but a government press release dated Sept. 11, 2015 says that 45 per cent of Nunavut residents receive assistance.

Nunavut’s department of Family Services reviewed the social assistance program by consulting with communities across the territory last fall and the results will be delivered by the minister during the current sitting of the legislative assembly. In this year’s budget address, Nunavut’s Finance Minister Keith Peterson announced that social assistance spending will increase by 20 per cent over the previous year.

Though the similarity in amounts earned though income assistance and full-time minimum wage work provides a disincentive to take employment, a more important factor to consider is housing. More than half of Nunavut’s population lives in public housing, according to the Caledon Institution report, and social housing cost an estimated $180 million in 2013. That cost is five times the amount of Nunavut’s income support program, say the authors of Understanding Poverty in Nunavut.

The minimum rent paid by residents of social housing is $60 and rents are geared to income, but an individual working full time at minimum wage does not qualify to pay the minimum rent. In a normal housing market there is an incentive to pursue a higher paying job in order to move into better housing, but in most Nunavut communities there is no better housing available.

“The threat of losing one’s home as a result of employment is a huge consideration” in deciding to choose the security of income assistance and social housing over the insecurity of wage labour and the housing market, according to the authors of the report.

Legislation to increase the minimum wage may be supported by both the public and business owners, but social assistance and housing policies play a far more important role in dealing with Nunavut’s persistent high levels of poverty.◉

Photo: Houses in Rankin Inlet. Credit: Michael Swan (CC)

You Might Also Like