Why a living wage matters in the North

Kendall Hammond

Last June, the Yukon Anti-Poverty Coalition released Living Wage in Whitehorse, Yukon: 2016, a report presenting the first-ever living wage calculation for Whitehorse and only the second such calculation conducted for a community in the territorial North to date. The Coalition found that the living wage for Whitehorse was $19.12 in 2016, one of the highest amounts in Canada.

The living wage is equal to the hourly rate of pay that a household requires to meet its basic needs, such as adequate housing and nutritious food, after accounting for government transfers (e.g., the Canada Child Benefit) and deductions from income (e.g., income taxes and Canada Pension Plan premiums). The living wage measures of the cost of living in a community in a way that directly integrates the role of public policy, including the provision of social services and the tax-and-transfer system. Therefore, calculating the living wage provides a lens to assess and propose policies designed to improve affordability and alleviate poverty.

In 2013, the Canadian Centre for Policy Alternatives, First Call BC, and Vibrant Communities Canada developed the Canadian Living Wage Framework to provide a standardized methodology for living wage calculations across the country. Adhering to a standardized methodology enhances the credibility of these calculations by ensuring consistency and thus allows for a meaningful comparison of findings across communities, since any differences in the living wage amount reflect real differences in the cost of living. The framework provides a definition of the reference family and a list of household expenses intended to represent a modest standard of living.

The reference family consists of two adults between the ages of 31 and 50 who both work full time to provide for two children ages 4 and 7. Although the reference family does not adequately reflect the vast diversity of living situations found in Canada and throughout the North, Statistics Canada reports that 79% of Whitehorse families are headed by couples, and 60% of those households include two or more children.

The reference family purposely includes children between the ages of 4 and 7 so that the calculation captures the cost of child care while accurately reflecting the cost of raising children to ensure that the living wage can support a family throughout the life cycle. Researchers who have calculated the living wage for other household compositions typically find that the hourly wage that a single-person household requires to meet their basic needs is similar to what both workers in the reference family must earn. However, the hourly wage that an individual in a lone-parent household requires to meet their basic needs is significantly greater.

The Canadian Living Wage Framework incorporates all household expenses included in Statistics Canada’s Market Basket Measure (i.e., food, clothing, housing, and transportation) plus additional costs related to health care, child care, education, and maintaining a small contingency fund to protect against job loss or sudden illness. As such, earning a living wage enables families to enjoy a modest standard of living while avoiding the adverse health and social outcomes associated with poverty. However, the calculation does not account for many items that Canadians take for granted such as home ownership, retirement savings, and credit card debt. Other items not accounted for in the calculation include pet ownership, taking vacations, and eating at restaurants.

As stated previously, calculating the living wage in a manner consistent with the methodology outlined in the Canadian Living Wage Framework allows for a comparison of the cost of living in different communities. A community with a lower living wage is inherently more affordable than one with a higher living wage amount. The high cost of basic needs in Whitehorse compared to most Canadian communities served as the primary determinant of its relatively high living wage in 2016. For example, a family of four typically spends $1,800 each month on shelter in Whitehorse whereas the same family would pay $1,650 in Vancouver,1 one of the most notoriously expensive housing markets in the country. Other significant monthly expenses incurred by the Whitehorse reference family include child care ($1,069), food ($1,023), and transportation ($523).

The living wage provides a lens for assessing the impact of policies designed to reduce poverty and make life more affordable for low-income households. For example, the federal government replaced the Canada Child Tax Benefit, the Universal Child Care Benefit, and tax credits for eligible child fitness and arts expenses with the Canada Child Benefit in 2016. Compared to the previous arrangement, the tax-free Canada Child Benefit provides more generous assistance to low-income households. Many communities saw their living wage decrease after the introduction of the benefit; the Whitehorse living wage was $1.52 less than what would have otherwise been the case under the previous arrangement. The federal government estimates that the Canada Child Benefit will lift 300,000 children out of poverty.

The Yukon Anti-Poverty Coalition used the living wage report as a tool to advocate for policies to alleviate poverty such as investments in social and affordable housing, subsidized public transportation for low-income households, and the creation of a $10 per day child care program. The Coalition estimates that subsidized public transit could reduce the living wage by 49 cents while the creation of a publicly funded child care program could lower the living wage by $4.95. The Yukon Federation of Labour and the Yukon New Democratic Party used the findings of the report to call on the territorial government to increase the minimum wage from $11.07 to $15 per hour to better reflect the cost of living in the territory. The Coalition has committed to calculating the living wage every year to measure and track the impact of government policies to make life more affordable for low-income households and reduce the prevalence of working poverty by closing the gap between the minimum wage and the living wage.

The living wage can also serve as a measure of low-income as those earning less than the living wage amount for their community will undoubtedly face significant challenges meeting their basic needs. Calculating the living wage for communities throughout the territories can significantly improve our understanding of poverty in the North since Statistics Canada does not report any of its measures of low-income (i.e., the Low-Income Cut-Off, the Low-Income Measure, or the Market Basket Measure) for Yukon, the Northwest Territories, or Nunavut.

During the 2010 methodological review of the Market Basket Measure, all three territories, as well as British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, and Newfoundland and Labrador, requested that Statistics Canada calculate the Market Basket Measure for each territory and the Northern regions of each of these provinces. Despite acknowledging that calculating the Market Basket Measure would enhance our understanding of the cost of living and the prevalence of poverty in the North, Statistics Canada argued that it could not feasibly collect this information. Statistics Canada cautioned that data collected from large geographic areas with small and scattered populations where costs may vary significantly might not produce statistically reliable estimates of the Market Basket Measure.2

The inability of Statistics Canada to measure low-income in Yukon, the Northwest Territories, Nunavut, and the Northern regions of most provinces limits our understanding of poverty in the North. A recent paper attempted to address this shortfall by developing a northern equivalence scale using econometrics to estimate the cost of living and the prevalence of poverty in the territories relative to the rest of Canada. According to Daley, Burton, and Phipps, the cost of living is 1.46 times higher in the territories than compared to the rest of Canada, and 27.1% of Northern households live in poverty compared to 10.4% of households in the rest of Canada.3 However, this estimate does not account for the vast differences in the cost of living both between and within territories. For example, Indian and Northern Affairs (now Indigenous and Northern Affairs Canada) reported in 2008 that food was 2.4 times more expensive in Old Crow than in Whitehorse.4 By incorporating community-level data, living wage calculations avoid some of the uncertainty inherent in regional estimates of the cost of living.

To date, Yellowknife is the only other community in the territorial North where the living wage has been calculated. In 2015, Alternatives North found that the Yellowknife living wage equalled $20.68,5 the highest amount in the country at that time. One possible reason as to why the living wage has not been calculated for more Northern communities is that the calculation guide developed by the Canadian Centre for Policy Alternatives does not address data challenges unique to the North, such as Statistics Canada not reporting the Market Basket Measure. To mitigate this barrier and facilitate future living wage calculations for communities throughout the territories, the Yukon Anti-Poverty Coalition developed a guide that explains each step of the calculation process and identifies each data source incorporated in the Whitehorse calculation.

Calculating the living wage for Northern communities can improve our understanding of the cost of living and the prevalence of poverty in the North while allowing the impact of government policies designed to address affordability challenges to be measured and tracked over time. Additionally, calculating the living wage provides grassroots organizations with a lens to propose policies to alleviate poverty and improve affordability for their community. ◉

Kendall Hammond is a public policy researcher and the author of the report Living Wage in Whitehorse, Yukon: 2016. The full report and accompanying calculation guide are available on the Yukon Anti-Poverty Coalition website at www.yapc.ca

Endnotes

  1. Iglika Ivanova & Seth Klein. Work for a Living Wage: Making Paid Work Meet Basic Family Needs in Metro Vancouver – 2016 Update. Canada Centre for Policy Alternatives. April, 2016, p. 3.
  2. Michael Hatfield, Wendy Pyper & Burton Fustajtis. First Comprehensive Review of the Market Basket Measure of Low Income: Final Report. Human Resources and Skills Development Canada. June, 2010, p. 9.
  3. Angela Daley, Peter Burton & Shelley Phipps. Measuring poverty and inequality in northern Canada. Journal of Children and Poverty, 21:2, 2015, pp. 89-98.
  4. Indian and Northern Affairs Canada. Regional results of price surveys: Yukon. January 15, 2009.
  5. Michel Haener. Yellowknife Living Wage: 2015. Alternatives North. August, 2015, p. 1.

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