Toronto Still Eating Its Young

Funny how the CCPA can be relied on to produce absolutely unreal statistics. Shockingly they've set their numbers so that the median couple with children in Canada is earning just about their "minimum" - 72k vs 64k.

Minimum wages shouldn't exist, but at the very least they should be very low. It encourages job creation and enables people to get on the career ladder. Were the minimum wage to be 70k, then very very few people would be able to get a start, as it's a much bigger risk to hire someone unproven for 70k than for 18k.

Finally, minimum wages should be incapable of supporting a family. They are jobs for those just starting out, and even then not for very long. Teens in their first job get the minimum, but if an employer wants to keep them they quickly get a raise. If you can't get a job for more than minimum wage you have serious problems and shouldn't have a family anyways. Professionals work far more than 40 hours and for no overtime, so anyone supporting a family should expect the household hours worked to be somewhere north of 80 per week.

In other words, get a haircut and get a real job.

Since when did anyone need a vehicle to participate in the community?
Quit upping the poverty line with non-essentials.

This from the page that attacks the impartiality of the CD Howe institute (staffed largely by tenured academics) ... .

I'll bet many of us were raised on incomes far below the targeted rate, adjusted in real terms.

From the report, a person earning the targeted income of $64,783 pays ~11% of their income in tax (not to mention tax credits they are entitled to). A person earning twice the targeted income of $129,566 pays ~32% of their income in taxes (also net of credits). This is evidence of an enormously progressive tax system.

Assuming for the sake of argument that the policy goal of a living wage is defensible, the policy choice of higher wages is far more costly in terms of unemployment and productivity loss than an alternate policy of increasing tax transfers to persons below the cutoff. In other words, the authors prefer a policy that penalises business (and labour) activity than one that achieves the same result without impacting the cost of doing business in Ontario. Why they would choose the former is beyond me, but I would conjecture it arises from the interest group's anti-business animus.

@Svend: since forever. This is why high gas prices are so politically sensitive in the U.S.; the average small-town American has an unavoidable, long commute and must spend a large portion of his income on fuel. The TTC is really only adequate for commuting at popular hours and on heavily-traveled routes. The poor searching for minimum-wage jobs also have less choice about where in the city they work. A single parent living in Etobicoke and only able to find a job in Scarborough cannot both spend 3+ hours on transit each day and care for his or her children.

@RealityCheck: The article acknowledges that jobs are created: "the number of jobs paying less-than-sufficient wages increased." No sensible person will agree that "job creation" in the abstract is invariably good. The Soviet Union had numerous cities in which everyone was "employed" but most were starving. By your criteria these would be satisfactory.

I encourage you to read The Affluent Society (J.K. Galbraith, 1958). I won't butcher his arguments by paraphrasing, but he poses the question: if the economy supports the manufacture of marginal, non-essential goods (iPods, Hummers, etc.), is there any reason essential goods should not be universally affordable? 50 years later, the answer still seems to be "No."

There are multiple issues here.

1) What is poverty; how do we measure it; how much of it is there.

Poverty has been defined in a variety of ways but we all understand this basic concept. Poverty is an insufficiency of income or other economic resources to afford those necessities such as basic food, shelter, medicine, running water, clothing etc. that are necessary to sustain life. Further, it may also be defined as resources insufficient to obtain employment or an education, such as a phone (where someone can call you with a job offer).

The Poverty rate varies nationally and even regionally; the tightest definitions would suggest around 10% of people over the age 18, and not living at home with mom and dad have insufficient resources to meet their basic needs without government intervention; other models may peg the number to upwards of 20%.

2) Having agreed that there is poverty, in both absolute and relative terms; the question becomes should society do something about this; and if so, what?

My answer is that of course society should tackle absolute poverty (relative poverty is really more correctly described as income inequality as is an issue in its own right, but a separate one).

Now why should society tackle this issue? Surely have a conscience might be a good reason. But it needn't be the one you choose; there are perfectly good selfish reasons to work against poverty. For one, individuals who both lack the basics, and who have lost hope and/or faith in society tend to be more likely to commit crime. That crime ends up being suppressed by law enforcement, which is expensive it its own right, but can lead to $100,000 per year prison. The cost to society of any form of assistance to this person, prior to their committing crime would likely be far lower, and result in lower taxation, and fewer victims of crime.

More over, an individual earning a very low income likely pays little or no tax, which has the effect of driving up taxation on the rest of us.

Better to ensure through a mix of incentives, and supports, private sector and public the reasonable opportunity for most people to be 'decently' off; and self-supporting.

We can debate in circles over which mix of social supports, labour standards, charitable works, familial engagement works best. But we can safely say, given the current rates of poverty, that current system is less that ideally effective.

My own assumptions are these:

1) The minimum wage should be set at a level where anyone willing and able to work 40 paid hours, can earn a sufficient sum to support themselves in a very basic way. In Toronto, I would suppose that living in a very modest studio or basement apt. with a phone, the slowest internet (so you can have email), adequate food, clothes, TTC, some furniture etc. You would need somewhere around $24,000, after tax to get by.

That's about $12.00 per hour, tax free. Reaching this is not un-manageable. The Minimum Wage, historically, adjusted for inflation, peaked at around this amount (before tax), in the 1970's.

Of course we should be responsible and phase it in.

And I have no objection to some offsetting reduction in business taxes, particularly though GST/PST harmonization.

Now in concert we need to eliminate taxes on those with a minimum wage income. Together these two measure would take most, but not all employed people out of poverty. They would also make the work option more attractive in general, and likely increase the labour force participation rate.

One need not massive raise rates in the above exemption brackets either; one need only eliminate the endless slew of exemptions, which serve to pervert the tax code and make the state rates something of a farce.

@x the x: The CD Howe Institute is certainly non-partisan and non-profit, but "impartial"? Please! Their ideological perspective -- especially with respect to tax policy -- is a mystery to no-one. All think tanks have an agenda... I'd be more suspicious of those that refuse to acknowledge theirs openly. Also, if you think that "tenured academic" is synonymous with "impartial", well, I'm not sure where to begin.

@Vincent Clement: The 'living wage' is hardly a "new cause", for the CCPA or anyone else. Every argument in favour of raising the minimum wage is made with reference to such a target. Also, I'd imagine you'll find that most all CAW members already earn more than the living wage... because they've already secured it for themselves. How dare they pay an economist to suggest that others might benefit similarly?

Vincent, I can sort of see what you mean. The boundary is fuzzy.

However, it's pointless to operate on a narrow definition of 'essential.' A child raised in a bare home, without toys, entertainment or extracurriculars, will continue breathing, yes, but (s)he will hardly thrive. I suspect we could find evidence that such children are very likely to become poor adults.

I don't have a car or TV either, but I do spend money on things which keep me sane and happy. I own a bike that I use when the TTC will be too slow. I buy new jeans when my old ones develop holes, not because I will freeze, but because I can afford to look respectable.

Without trying to resolve the nature-or-nurture debate, or to make a definitive list, it should be possible to agree that the essential goods are things necessary to give people a reasonable opportunity for success in life.

If poverty is a flaw in or a burden on society, it follows to support measures that will ensure there are fewer poor people. "Starve them until they wise up," is against the Charter, so the living wage is a sensible target.

Based upon a monthly rent of $450 including utilities in shared living, with $20/month in mobile costs (pre-paid, work purposes only), $350/mo for food, $150/mo for entertainment and $50/mo for internet, your yearly living expenses would be $12240. You would have to earn $13,000 per year before taxes (calculate tax off your gross earnings here, includes Federal and Provincial taxes). 40 hours/week @$8/hour = $15,360 gross (little over $14k take home). The extra cash is to cover incidentals like clothes and such.

It's very possible to live in Toronto on a minimum wage job, it's just that you have to really restrict your "fun" spending and make your "community involvement" not cost anything. Life may not be exciting at that level, but it's a starting point. Also, you eat pretty damn well at $350/month.

Don't ever forget that it's the little things that cause most of your money to leak away. Eating out, the coffees, candy bars, dates, the concerts that kill your finances.

Nevermind, I assume all of those necessities will come out of "entertainment". I'll assume there's $0 for transportation, too... hope you can walk to work, pal!

@Greg Smith: No, I will not work with you.

Taxes are coercive. You don't have a choice, so it's not sharing.

I was talking about a voluntary transfer of wealth between CAW members and the working poor. Maybe each CAW family can 'adopt' a poor family. Help them achieve their goal of a living wage.

But that would require investing one's own time and money. It's much easier to use the strong arm of government and force people to share.

To arrive at numbers for debate, the authors need to cost something. Assuming cable is too luxurious, should the poor be allowed a TV? How large, at most? How about an outdoor antenna for broadcast feeds? How many metres, at most? Either the boundary is fuzzy, or no-one is poor who owns a TV larger than 20 inches diagonal. I'm not sure how enforcing that type of constraint would be consistent with your stance against the "strong arm of government."

If you are dissatisfied with the figures, assume a larger margin of error—25%, if you like. In the end, the figures are unimportant; poverty is a real problem.

Two days ago I said "we could find evidence that [poor] children are very likely to become poor adults." This report was released yesterday—the data are on page 4, so you need not read any tiresome rhetoric. I'm not sure how much the clearer the correlation could be: poverty is a burden on the economy and all levels of government.

Unless you prefer to continue paying those costs with your taxes, you should not be so eager to attack the concept of a living wage.

@MaryDunne: I would rather that the government subsidize people moving to where the jobs are than handing out money so people can get $70 cable TV.

As to the "psychological costs", lots of people move, and most of them are fine. Besides why aren't their "old friends" and their "family" helping them out?

@Paul Kishimoto: I agree, poverty is a burden, but having the government subsidize a so-called living wage is just throwing more money at the problem. A living wage does not solve the underlying causes of poverty. It just gives the poor more money to spend, which I agree, in limited cases may help.

As to the OAFB report, page 4 is the usual drivel. I find pages 5, 14 and 15 and Appendix Two are far more interesting and far more useful.

I've never been opposed to rewarding people for accomplishing things. If a low-income person finally finds a decent or good paying job, they shouldn't lose their benefits immediately. They should receive a top-up for some predetermined time to help them build up a reserve, to so-called 'dig themselves out'.

Now, if you tied that living wage to some type or group of performance measures, say, kids staying in school and getting good grades, parents attending school part-time, volunteering or some other type of improvement, not having more kids, etc., then let's talk.