Living wage now $25 an hour in N.L., policy think-tank says

A living wage in Newfoundland and Labrador is $25 an hour overall, according to a new report from the Canadian Centre for Policy Alternatives.

Titled "Closing the Gap between the Cost of Living and Low-Waged Employment," the report, which was released Tuesday, calculates what is considered to be a living wage in Newfoundland and Labrador, Nova Scotia and Prince Edward Island. 

The report says a living wage in eastern Newfoundland is $24.70. In the central and western regions it's $24.10, and in Labrador and the Northern Peninsula it's $27.30. Overall, it's gone up by two per cent over the year prior.

"It's not measuring wages, it's measuring what a … household needs to earn in order to cover a very conservative basic package of household costs," said political scientist Russell Williams, one of the report's co-authors.

Williams says to calculate a living wage, the policy think-tank factors in employment income, money from government transfers like child benefits, employment insurance and Canada Pension Plan payments.  

He says they include necessities like housing, food, transportation, clothing, child and health care, along with other basics for a family of four with two working parents and two school-age children.  

"What it doesn't cover, though, is sort of accumulated debt. So if you have big credit card bills that you're sinking under, that's not included in our model. And that's often a real stressor for people that are in financial difficulty. And it doesn't include savings," said Williams. 

Meanwhile, the report says the biggest budgetary increases over the last year for families in the eastern region have been in transportation and shelter, which is up 10.2 per cent and 8.8 per cent respectively. 

Report calls for minimum wage increase

Williams says an increasing living wage means that many earning a minimum wage, which is $15.60 in Newfoundland and Labrador, are falling behind.

"We're now in a situation where we have a gap, right? The gap, when we express it as an hourly wage, is almost $10 an hour between what some people earn and what they would need to earn to cover those basic expenses," Williams said.

"This is a serious social and economic problem."

The report calls on the provincial government to increase minimum wage to help low-wage earners. 

"People are drowning," said Williams. "The situation is bad, it's getting worse, and they don't know what they're going to do about it."

Williams also says the provincial and federal governments can also make public policy changes that will help low-wage earners make up the gap by supporting affordable housing, public transportation and other social programs.

But many people who earn more than the minimum wage but less than a living wage often make too much to qualify for social benefits like the Newfoundland and Labrador Child Benefit, or if they do receive any benefits, they are subject to clawbacks.

"We haven't really accounted enough for inflation, that essentially the government needs to recalibrate to understand how the cost of living has increased," he said.  

The report says a living wage in Nova Scotia is $26.53 and $22.76 in Prince Edward Island, while minimum wage in each province is respectively $15.20 and $15.40 per hour. 

"Close to half the labour force in the region is on that threshold, right, on that dividing line.… We know, for example, that almost a third of people in Atlantic Canada make less than $20 an hour," Williams said. "We're we're not talking about a few households here, we're talking about a big chunk of the community."

Williams says employers, especially ones struggling to attract staff, should increase their wages.

In a statement, the provincial government said it appreciates "the challenges associated with a higher cost of living on lower-income individuals" and said that's why it increased minimum wage to $15.60 an hour in April, introduced basic income pilots and hiked the provincial child benefit.

Spokesperson Victoria Barbour wrote that the province reviews minimum wage every two years and began its latest review in February, and is currently analyzing information from consultations.

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