Canadian HR Reporter

February 10, 2014 News Canadian HR Reporter 3 Implementation of living wage policy leads to fewer jobs, hours, less training: Report But supporters claim it's a tool that can help people climb out of poverty By Sarah Dobson in 2011, the City of New Westminster in British Columbia became the first — and only — Canadian city to adopt a living wage ordinance. Under the ordinance, all firms that are contracted directly or subcontracted by the city to provide services on city premises must pay employees who perform the services a living wage — an hourly amount to cover basic expenses. The figure for 2013 for the lower mainland is $19.62 per hour, assuming no benefits are provided by the employer. But this may not be the best approach, according to a report from the Fraser Institute, a research and educational organization, which said employers respond to living wage policies by cutting back on jobs, hours and on-the-job training. They also end up hiring more qualified workers at the expense of those with fewer skills in order to offset some of the higher wage costs. "The evidence tells us when you move from say a $10 minimum wage to about a $20 living wage, you can expect employment reductions for people at the very low end of the skill and wage distribution anywhere between 12 and 17 per cent, so I think if we care about people that have the least amount of skills and low wages, the last thing we want to do is reduce job opportunities," said Charles Lammam, a resident scholar in economic policy at the Fraser Institute in Vancouver. When faced with an artificially higher wage, employers are going to hire the most skilled, most productive workers — and those workers are the ones who will be paid higher wages anyway, said Lammam, who wrote the report. "The result then is people who have less skill, less education are the ones that will be passed on first because their productivity levels are not going to match the new wage rate mandated by government." In some cases, minimum wage increases or living wages actually hurt the people they're intended to help, said Plamen Petkov, vicepresident for Ontario at the Canadian Federation of Independent Business (CFIB) in Toronto. "If a business owner cannot cope with the increases, they'll have no choice but either to reduce hours, to lay off employees, not to extend contracts with contract employees — and usually those are the people who rely on minimum wage, so they end up being the ones who are really hurt," he said. "As opposed to really helping those who are dependent on a living wage or minimum wage, that's not really the case or at least we don't see sufficient evidence to support that. If there was evidence, then pretty much every city, every municipality would have been asking for a living wage right now. And that's not really what we're seeing here." In fact, the "overwhelming proportion" of those benefiting from living wage laws tend not to be poor, according to the Fraser Institute report The Economic Effects of Living Wage Laws. And while living wage legislation may make them better off in terms of labour market earnings, they will experience a countervailing effect due to reduced eligibility for benefits from government social programs. But Joan Burgess, director of human resources at the City of Westminster, said the living wage policy has been a positive experience — though it hasn't had a quantifiable result. "We are a fully unionized workplace and it was only a few positions at the lowest-paid level that were adjusted to meet the living wage. It hasn't resulted in attract- COOPERATING TO IMPROVE HEART HEALTH FOR ISABELLE SMITH SURVIVOR ing more employees or a greater number of positions, it's just been kind of status quo in that those few positions that were beneath the level of the living wage were adjusted to the living wage. I'm sure it has provided the opportunity to those employees that were provided with the living wage — it enhances their income and therefore, from an economic perspective, I'm sure they can spend a bit more. Do we actually see this? No." From a training perspective, the municipality provides training to all employees, as required within the scope of their duties, she said. "We would not skimp on that training, regardless of the hourly wage being provided." And the city is careful about the number of positions it creates, DEFINITION > pg. 6 IT'S HEART MONTH. LEARN HOW TO REDUCE YOUR RISK. Try the Heart and Stroke Foundation's eTools at: heartandstroke.ca/yourrisk desjardinslifeinsurance.com Proud Partner of Desjardins Insurance refers to Desjardins Financial Security Life Assurance Company. PRODUIT : CORPORATE FORMAT : 7 9/16'' X 10''

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