jillumbach Advocacy, Media

Make Affordable Transit an issue in Ontario’s Next Poverty Reduction Strategy

September 2013

Affordable transit is essential to the health of people living on a low income. It enables access to employment, education, health services, food, and recreation and other city or community services such as places to go to get relief from dangerously hot or cold weather. It also plays a key role in promoting inclusive communities.  In many areas across the province, the lack of affordable transit for people living on a low income is a significant problem – as identified through previous provincial government consultations on poverty reduction and social assistance:

“In community after community, lack of access to public transportation was a significant issue we heard about from people living in poverty; people simply could not afford to take the bus. That means that they are unable to apply for jobs or access resources that are there for them and their children. ”
-Breaking the Cycle: Ontario’s Poverty Reduction Strategy, 2008

” We frequently heard about difficulties in accessing transportation. In urban areas, the concern is the affordability of public transit. In many small towns and rural communities, the concern is the lack of any kind of public transit. This is especially difficult for people with disabilities. ”
– Brighter Prospects: Transforming Social Assistance in Ontario, 2012

Many communities are recognizing that cost is a barrier to transit use and are implementing a range of affordability strategies. For example, British Columbia and Saskatchewan make transit passes available at discounted prices for low income residents. In Ontario, transportation subsidies may be available to social assistance recipients for employment-related activities and medical therapy or treatment; however 

transportation costs for other important activities are not covered – such as for grocery shopping and support for children who need to be dropped off and picked up at day care or school, and/or older children who need to travel to school by transit.

Several cities and regions in Ontario are also implementing discount transit pass programs for low income residents and enabling community agencies to purchase tickets at a reduced rate from transit authorities to provide free of charge to community members accessing their services.

Being able to travel without restrictions to work, school, recreation and other places is important to creating healthy and inclusive communities. Making transit affordable and accessible for people living on a low income in communities where there is a public transit system is the best way to ensure that day-to-day activities are possible. Where there is no public transit system, local solutions must be identified and funded. 

When you attend a consultation meeting or send in your ideas, tell the government you would like to see the following included in Ontario’s next poverty reduction strategy:

1. Provide adequate and dependable funding to public transit across urban areas throughout the province, funding that allows transit to be affordable to all people who need it.

2. Implement a provincially funded discount transit pass program for people living on a low income in communities with a public transit system.

3. Convene an advisory group to examine best practices for increasing access to transportation for people living on a low income in communities without a public transit system.

4. Ensure that social assistance covers the regional cost of transportation in addition to other basic needs.

5. Ensure that the determination of minimum wage levels addresses the cost of transportation.

6. Ensure that any new funding for transit expansion target populations/places that are currently underserved and that a portion of these funds be used to improve transit affordability for people living on a low income.

7. Advocate for both provincial and national transit strategies.

Social Planning Toronto 

jillumbach Advocacy, Media

Could You Live Off a Minimum Wage Job?

National President, Unifor Founding Convention

Posted: 09/19/2013 11:41 am

Minimum wage jobs are not only for the after-school crowd of kids looking for spending money, but also an entry into the workforce for immigrants, recent graduates and many others who can only find part-time work and need to hold down two or three jobs to survive.

The most recent Statistics Canada job market figures say 70 per cent of the province’s 44,000 new jobs created in August are part-time and mostly filled by older workers. It’s also a safe bet they are mostly paid at minimum wage.

Across Canada, minimum wage ranges from $9 an hour in Alberta to $11 in Nunavut, while in most provinces it is set at $10. Unifor’s recent submission to Ontario’s Minimum Wage Panel Review should be required reading for all of them.

Consider that:
• Minimum wages in Ontario have been frozen for three-and-a-half years at $10.25 per hour, while consumer prices have increased by over 7 percent (measured by Statistics Canada’s all-items CPI for Ontario). The resulting decline in real incomes for low-wage workers is very unfair, and has undermined household finances and consumer spending in the province.

• Relative to average wages, and average hourly productivity, minimum wages in Ontario are significantly lower today than they were even in the 1970s.

• Even working full-time year-round, the existing minimum wage would leave a single worker in Ontario (with no dependents) well below low-income cut-off for a single resident (the low-income cut-off is a measure of relative poverty).

Clearly, the existing minimum wage in Ontario doesn’t give working people a chance to provide for themselves and their dependents at a decent standard of living.

The proposal now being considered by the Ontario government to raise the minimum wage to $14 an hour won’t lift the burden of poverty that weighs on low-end wage earners. But it will lighten the load somewhat.

Unifor supports the proposal as a first step of a broader strategy to ensure all workers can enjoy decent living standards.

Our position is that it should be combined, though, with other measures such as employer-specific policies, training and placement initiatives, and other policy tools aimed at lifting wages to what could genuinely be considered a “living wage.” Studies have estimated a living wage to be around $18 per hour for Ontario — an amount sufficient to allow a family of four, with two wage-earners, to pay for the basic necessities of family life.

Some economists argue that higher minimum wages will lead to higher unemployment, but a good body of evidence exists showing little connection between minimum wage levels and employment.

On the other hand, by boosting purchasing power and consumer spending, and helping lower-income families reduce their debt loads, a higher minimum wage could actually have a net positive impact on jobs and on quality of life for everyone.

Unlike the often-failed trickle-down theory of wealth accumulation, when minimum wages are raised, there is a demonstrable trickle-up benefit for the entire working community. In addition to the psychological and social benefits of being able to support oneself, stronger family incomes lead to increased demand for products and services, financially viable businesses, and a generally more vibrant community.

Of course the opposite is true when young people can’t afford to move out of their parents’ basement, families rely on food banks to feed their children, or stressed-out, single parents juggle part-time jobs to stay out of poverty.

The Ontario government can and should do better for its lowest paid workers. Giving them a chance at a decent standard of living raises the bar for everyone.

Jerry Dias is the national president of Unifor, Canada’s largest union in the private sector. Created on August 31, with the coming together of the former Canadian Auto Workers union and the Communications, Energy and Paperworkers Union, Unifor represents more than 300,000 members working in at least 20 sectors of the economy (including all stages of the economic value chain, from resources to manufacturing to transportation to private and public services).

jillumbach Media, Research

Charles Lammam & Hugh MacIntyre: Help young workers, don’t raise the minimum wage

Charles Lammam and Hugh MacIntyre, National Post | 13/08/26 | Last Updated:13/08/23 1:30 PM ET

Youth unemployment is still unacceptably high,” noted the Ontario government as it identified priorities in its 2013 budget. Oddly, however, the government is now contemplating a policy that would make it harder for young Ontarians to find jobs. With its newly minted advisory panel, the government is considering ways to automatically increase the minimum wage by tying its future value to changes in inflation or perhaps economic growth.

The panel’s lofty goal is to “come up with a system that will ensure both job creation and income security for all Ontarians.” Achieving it, however, is wishful thinking. Scores of economic studies have found that minimum wage increases result in fewer job opportunities, particularly for the young and low-skilled.

Before the panel gives its recommendations, it should ponder a new study published earlier this month by the National Bureau of Economic Research. Instead of the traditional approach of looking at employment levels, the authors looked at how minimum wage increases impact net job creation (jobs created minus jobs destroyed). After examining data in U.S. states from 1977 to 2011, they found that a 10% increase in the minimum wage led to about a one-quarter reduction in the rate of net job growth. Put another way: increasing the minimum wage reduced the rate of jobs being created, resulting in fewer employment opportunities than would have otherwise occurred.

Of course, one study alone is not convincing evidence of the destructive effect of minimum wage hikes. So consider a comprehensive review of the academic literature conducted in 2006 on minimum wages and employment. Led by Professor David Neumark, an expert in the area, the review looked at more than 100 studies covering 20 countries and found an overwhelming majority of studies reached the conclusion that minimum wage hikes negatively impact employment.

In Canada, more than a dozen studies have examined the impact of provincial minimum wage increases. Based on those findings, a 10% minimum wage hike decreases employment for young workers (ages 15-24) by an average of 3-6%. For young workers most affected — those earning between the current minimum wage and the proposed higher wage — the impact is more acute, with job losses of up to 20%.

To understand why increasing the minimum wage has such negative effects, it is important to recognize how compensation is determined in competitive markets. Compensation is based on the amount employees produce — their labour productivity. For example, if a fast-food employee can produce a maximum $8 worth of output each hour, then her employer would be willing to pay up to $8 per hour in total compensation. In other words, the employer aims to match per unit labour costs with the value of what their employees produce.

If the government imposes a minimum wage rate that results in compensation exceeding an employee’s maximum ability to produce, employers adjust their affairs accordingly. Employers not only respond by decreasing the number of jobs but also byreducing the hours employees work, cutting non-wage benefits like on-the-job training,giving priority to the most productive employees, and/or finding ways to operate with fewer workers and more automation.

There is also a growing body of evidence showing that minimum wage increases actually do little to help households in need.

A 2012 study by prominent Canadian minimum wage experts analyzed provincial data from 1997 to 2007 and found that raising the minimum wage had no statistically discernible impact on measures of relative poverty (including Statistics Canada’s Low Income Cut-Off). One important reason is the bulk of minimum wage workers do not actually belong to low-income households. In a 2009 study, researchers used Statistics Canada data to profile minimum wage earners in Ontario. They found that “over 80% of low-wage earners are not members of poor households” (they define poverty as earning income that is half the median wage). The researchers also found that “over 75% of poor households do not have a member who is a low wage earner.”

If the government is serious about tackling Ontario’s youth unemployment and fostering job creation, then it should steer clear of future minimum wage increases regardless of what formula the advisory panel recommends. The reality is that increasing the minimum wage will actually reduce job opportunities while doing nothing to alleviate poverty.

National Post

Charles Lammam and Hugh MacIntyre are analysts at the Fraser Institute.

jillumbach Media

Minimum wage needs to be re-engineered

By:  Business, Published on Tue Aug 06 2013

Properly understood, the minimum wage is a stimulus benefiting the entire economy.

The minimum wage puts a floor under poverty among the working poor. (It would surprise many people to learn that most poor people work.)

It enables entry-level employees, notably youth working their way through college and university and immigrants intent on self-sufficiency, to get a solid start as dynamic contributors to a more prosperous Canada.

And in times of anaemic GDP growth like these, increases in the minimum wage boost economic activity to the advantage of all.

Anti-poverty activists chastise Queen’s Park over the province’s three-year freeze of the minimum wage, at $10.25 an hour. They should keep in mind that it was the Liberals who hiked the minimum wage by 50 per cent since taking power, ending a nine-year freeze at $6.85. If they imagine that a Premier Tim Hudak will show similar concern for the working poor, I’m the King of Siam.

These activists also despair that it has taken two years for the Liberals to honour their promise to set up an advisory panel on how best to calculate the minimum wage. Here they are on more defensible ground. Still, it’s understandable that Queen’s Park would be skittish about a panel that will likely call for a hike in the minimum-wage, when the powerful employer groups opposed to one will so easily cite a weak economy as reason not to do so. (A canard, as I’ve noted above: this form of stimulus is needed now more than ever.)

Plus, the advisory panel Queen’s Park named July 17 shows promising signs of reforming the minimum wage as one of government’s most effective tools for achieving at least a semblance of economic justice, along with the social safety net, job-training programs, and income supplements.

To this point in the history of the minimum wage, increases have been an ad hoc affair. This has given neither workers nor employers adequate explanation for their timing or desired effect, and obviously provided no one a chance to plan for and adjust to them.

Anil Verma is the University of Toronto business-school professor and specialist in industrial relations and human resources named to head the six-member advisory panel of business, labour and youth representatives. Verma wants to go still further in reforms.

Typically, inflation alone is used in calculating minimum-wage increases.

By contrast, Verma has an admirably holistic regard for the minimum-wage. It should be a tool for combating poverty, he believes, one that’s better integrated with other poverty-fighting practices. It should also be re-engineered to boost the overall economy and the productive capacity of the workforce.

Helping low-paid workers keep up with skyrocketing costs in housing, tuition and energy is fine and good. “But that ignores two other vital factors,” Verma told The Star when his appointment was announced. “One is the overall growth in the economy and the second is productivity on the job.”

Only a simpleton would fail to grasp that an under-educated workforce will not deliver the productivity gains required to enhance Canada’s global competitiveness. And that the formidable expense of undergraduate and mid-career adult education is holding us back in creating the world’s smartest workforce.

It’s sobering to consider that just over 1 million Canadian workers are employed at minimum wage jobs, 534,000 of them in Ontario. That’s because low-wage work in the service sector has surged, while traditional, higher-paying manufacturing jobs have been fading away. Note the stupendous growth of minimum-wage employers like Wal-Mart and Tim Hortons, Canada’s biggest retailer and fast-food operator, respectively.

For the nearly one in 10 Canadians paid the minimum wage – more than double the portion of only a decade ago — pre-tax annual income is $20,500, woefully inadequate to raise a family. By comparison, the average industrial wage is $45,588 per year. And the average pay for the 100 best-paid corporate CEOs is $7.7 million.

To judge from the Wall Street meltdown and the Lac-Mégantic tragedy, CEOs have not become noticeably more competent as their pay has soared. Yet it’s among their ranks that one hears loud objections to a few more shekels for the working class.

In a Canadian economy where consumer spending drives 54 per cent of GDP growth, it just makes sense to put more money in the pockets of those who quickly spend on necessities the additional pay they earn. Corporate Canada, by contrast, has been withholding from the economy its tax breaks, subsidies and burgeoning profits since the onset of the Great Recession.

I can’t say it better than the economist Armine Yalnizyn: “Employers don’t create jobs; consumers do.” As long as so many of the employees at my local Tims are forced to hold down two jobs to get by, I’ll know we’re not nearly the caring society we pride ourselves in being.