The terms living wage and minimum wage are not the same.
Even though they are sometimes confused, there’s a difference in what each term means.
Let’s look at the definitions of living wage and minimum wage and why it’s so important to understand the impact on workers in Canada.
CANADIAN MINIMUM WAGE
Duhaime’s Law Dictionary defines the term “minimum wage” as the following:
Minimum wage is the lowest wage rate an employer can pay an employee. Most employees are eligible for minimum wage, whether they are full-time, part-time, casual employees, or are paid an hourly rate, commission, piece rate, flat rate or salary.
In Canada, the minimum wage differs by province. A worker in Alberta may be paid a different minimum wage than say, a worker in Montreal.
The calendar below shows the different minimum wage rates across the provinces:
CANADIAN LIVING WAGE
Now we know how the minimum wage is defined in Canada, let’s look at the term living wage.
LivingWage.ca is a site dedicated to providing information about the living wage in Canada. On their site, a living wage is defined as the following:
The living wage is calculated as the hourly rate at which a household can meet its basic needs, once government transfers have been added to the family’s income and deductions have been subtracted.
But — a minimum wage should enable me to meet my basic needs, right? So, aren’t these the same?
Let’s look at a city like Vancouver, for example.
In 2017, the living wage for a family of four was set at $20.62. This is estimated by the 2017 study by the Canadian Centre for Policy Alternatives.
However, the minimum wage for British Columbia was $11.35, leaving a wage gap of $9.27.
A minimum wage earner starts out at a deficit and if the cost of living increases, this creates a larger financial burden.
Family members work several jobs and long hours to earn more income. They often choose between living necessities such as clothing or groceries, utilities or rent.
In this limited economic situation, families inevitably descend into poverty and debt. A major event such as illness can have devastating and long-lasting consequences.
LIVING WAGE COMMUNITIES
Fortunately, communities all over Canada recognize the poverty created by this pay disparity. Living Wage Canada has promoted the establishment of “living wage communities”.
Canadians are joining together to encourage living wages by promoting employers that pay living wages, educating members of the community on the need for a living wage, and monitoring when and how the cost of living changes in their province.
A worker that earns a living wage not only allows them to live a healthier, happier and more productive life, but it benefits employers as well.
Employers that pay a living wage are investing in their people and this means better employee morale, productivity and retention. This can only benefit a company in the long run.
Ironically, by paying people more, the cost to the bottom line is less. For families who have to choose between food or bills, it’s worth even more.