Report to/Rapport au :
Community and
Protective Services Committee
Comité des services communautaires et de protection
Submitted by/Soumis par : Alex Cullen, Councillor / Conseiller and Peggy
Feltmate, Councillor / Conseillere
Contact Person/Personne ressource : Alex Cullen, Councillor, Bay Ward
Elected
Representatives
(613)
580-2477, alex.cullen@ottawa.ca
SUBJECT:
|
|
|
|
|
OBJET :
|
REPORT RECOMMENDATIONS
That Community and Protective Services Committee direct staff to develop an Ottawa Living Wage policy that will:
1. Pay City of Ottawa employees a minimum wage of $13.25 an hour (without benefits)
2. Require contractors doing business with the City and companies receiving economic development grants from the City to pay their employees a minimum of $13.25 an hour (without benefits), to be reported to Community and Protective Services Committee by October 2009.
RECOMMANDATIONS DU RAPPORT
Que le Comité des services communautaires et de protection charge le personnel d'élaborer une politique sur le salaire minimum vital à Ottawa, qui permette
1.
d'offrir
aux employés de la Ville d'Ottawa un salaire minimum de 13,25 $ par heure (hors
avantages sociaux)
2.
exiger
des entrepreneurs faisant affaire avec la Ville et des entreprises recevant des
subventions municipales de développement économique de verser à leurs employés
un salaire d'au moins 13,25 $ par heure (hors avantages sociaux), et de rendre
compte au Comité des Services Communautaires et de Protection d'ici à octobre
2009.
BACKGROUND
Poverty in Ottawa is an unfortunate fact of life - according to the 2006 Census, 121,200 individuals in Ottawa (15.2% of the population) live below Statistics Canada's Low Income Cut-Offs (LICO) for a city the size of Ottawa (i.e. with annual incomes below $21,666 before taxes). Adjusting for seniors (age 65 and older) who fall into this category, this leaves 110,315 persons living below the poverty line. While those without work or who cannot work receive social assistance benefits (through Ontario Works and the Ontario Disability Support Program, respectively - about 60,000 individuals), there remains some 50,000 people in Ottawa - the working poor - who struggle to get by on minimum wage jobs, living below the poverty line and paying far more than they can afford in market rents for shelter, leaving little left over for food, clothing, their health, and their future.
In comparison to major Canadian cities, Ottawa’s average market rents (AMRs) are currently the
fourth highest in the country. Rents have increased much faster than incomes at the lower end of the income continuum. According to the City of Ottawa's Housing Strategy 2007-2012 an Ottawa household currently needs more than two minimum wage jobs to afford the average rent for a two-bedroom apartment at $941 per month. Minimum wage is not sufficient to lift families out of poverty.
ACORN, the Association of Community Organizations for Reform Now, is a community organization of low- and moderate-income families, working together for social justice and stronger communities. Founded in 1970 in the United States, ACORN has grown to 1,200 chapters across the U.S. and in June 2004 ACORN Canada was founded as a separate organization, growing to 20,000 member families. The members of ACORN take on issues of relevance to their communities, whether those issues are discrimination, affordable housing, a quality education, or better public services. ACORN believes that low- to moderate-income people are the best advocates for their communities, and so ACORN's low- to moderate-income members act as leaders, spokespeople, and decision-makers within the organization.
ACORN has initiated a Living Wage campaign to ensure that working people receive enough in wages to meet their basic needs, and has been successful in over 130 cities in implementing a Living Wage policy. The local ACORN chapter in Ottawa has developed a Living Wage policy paper for the City of Ottawa (see Supporting Documentation - attached).
DISCUSSION
The principle behind the Living Wage Policy is very clear - that any individual working full time earns enough to meet their basic needs and be able to build some savings for the future. This means a wage sufficient to meet the poverty level as defined by the Statistics Canada Low Income Cut-Offs (LICO), adjusted for population size. In Ottawa ACORN has estimated that, based on a 35 hour work week, the hourly wage needed to earn $21,666 (the Statistics Canada LICO for a city the size of Ottawa) would be $13.25 an hour before taxes, without benefits.
Hourly
Wage Required to Reach the 2007 LICO (pre-tax) for a Single Person, Hours
worked per week 30 35 37.5 38 40 Hourly
wage $13.89 $11.90 $11.11 $10.96 $10.42 Hourly
wage without benefits (adding
$1.25 premium) $15.25 $13.25 $12.35 $12.25 $11.75
Cities 500,000 or more
The City of Ottawa has a long history of supporting efforts to reduce poverty in our community, and now has the opportunity to lead by example. The application of the Ottawa Living Wage Policy is intended not only to involve City of Ottawa employees, but include those employees working for contractors providing services to the City of Ottawa, as well as companies receiving economic development grants from the City of Ottawa.
Given the success of implementing this Living Wage Policy in other cities, direction is being sought to develop a similar Living Wage Policy for the City of Ottawa. ACORN is willing to work with City staff in developing this policy and bringing it back to Committee and Council for ratification.
CONSULTATION
City Operations
City staff will review this proposal, including costing and implementation considerations, as part of the Poverty Reduction Strategy (ACS2009-COS-SOC-0005) approved by Council at its meeting of May 15, 2009. The Department proposes to report back in October of 2009.
FINANCIAL IMPLICATIONS
An estimated 477 City employees may be affected through the application of a Living Wage Policy based on the ACORN calculations. The application of a Living Wage Policy to contractors doing business with the City and companies receiving economic development grants from the City will have no direct cost implications for the City of Ottawa.
SUPPORTING DOCUMENTATION
Document
1 - ACORN Living Wage Fact Sheet
Document 2 - ACORN Report: Fair Pay with Public Dollars
DISPOSITION
City staff will develop an Ottawa Living Wage Policy in accordance to direction given by Committee, and prepare a report to CPS Committee and Council approval no later than October 2009.
Facts and Statistics
·
DOCUMENT
1 16 ACORN
Canada
19.2%, or almost 1 in 5, Canadian workers earn less
than $10 an hour (Canadian Center for
Policy Alternatives (CCPA))
·
An estimated 77% of Canadians agree that in a recession, it is more
important than ever to make helping low income Canadians a priority (CCPA).
·
The cost of poverty for Ontario residents is between $32 to $38 billion each year. (Ontario Association of Food Banks, Cost of
Poverty Report, November 2008)
·
Ottawa is ranked as
the 5th most expensive city
in Canada, and has moved up 23 spots
from 2007 (Mercer Worldwide Cost of Living Survey, 2008).
·
In 2005, 15.2%
of Ottawa residents were among the population living in low-income households
(Statistic Canada, 2006 Community Profiles for Ottawa, Ontario)
·
In 2008, there was a 15.2%
increase in the number of families using Ottawa’s shelter system (Aliance to End Homelessness, 2008).
What is Living Wage?
·
A Living Wage is a level
of pay which enables someone working full time to earn enough to meet their
basic needs and build some savings for the future.
Living Wage in North American
“In a number of
communities across the country there is a growing interest in a “Living Wage”
based on the belief that is a fundamental tenet of Canadian society that any
individual working full time should be able to lift themselves and their family
out of poverty” – Campaign 2000, Towards A Living Wage:
A Strategy to Raise the Fortune of Young Families with Children
·
More than a 140
U.S. cities, like Los Angeles, CA, Boston, MA, and Miami, FL have already
adopted Living Wage policy since this solution to financial sustainability was
introduced in the 1994.
·
Many Canadians
are currently exploring the impact of Living Wage policies in their
communities. These cities included,
Vancouver, Calgary, and Toronto.
Toronto currently maintains a well-established “fair wage” policy which
strictly prohibits the city from conducting business with any contractors and
suppliers who discriminate against their workers
·
The City of
Ottawa is on pace to be the first Canadian city to champion a Living Wage
policy.
Questions and
Answers
Will increasing wages lead to job loss within
the community?
·
Most studies
show that minimum wage increases have little or no effect on employment. For instance, Los Angeles employers only cut
employment in the affected sectors by only 1%.
This small reduction is greatly overshadowed by the fact that people are
now earning a living wage. Furthermore,
allowing people to earn a living wage will allow workers with two jobs or more
jobs to reduce their workload, thereby offsetting job loss and possibly
increasing job opportunities for others.
Will approving a municipal living wage bylaw
hurt local businesses?
·
More than 140
American cities have already opted for a living wage policy. Analysis of living wage campaigns in the US
found that for most businesses wage and benefit increases due to living wage
bylaws will be less than 1% of total spending.
But this was offset by a number of benefits to businesses, such as less
labour turnover, increased employee productivity, reduced training costs,
better cooperation with management, more flexibility in the operation of the
business, and a higher overall morale.
Will a living wage policy cause businesses to
re-locate?
·
Analysis of the
US experience showed no evidence that businesses will leave living wage
communities. Factors that attract
business are: a higher quality of life, an educated and skilled workforce, and
a good infrastructure. Most low wage
jobs are in the service sector and they are local, remaining wherever large
employers locate.
Even if wages increases, will the cost of
everything else rise as well?
·
Wages are just
one of several factors included in the calculation of the cost of an item. Given the small scale of Living Wage
proposal and the relatively low number of workers actually affected, large
scale inflation is highly unlikely.
Who is included in the Living Wage proposal?
·
Direct city workers
or public employees,
·
Employees of city
service contractors, like janitors, landscapers, clerical workers and parking
attendants to name a few,
·
And employees of
firms receiving economic development money from the city.
A
recent finding indicates that the targeted employees from the direct city
workers category are among a group of 477 individuals. However, we have yet to ascertain the amount
of city service contractors and employees receiving economic money from the
city. Most importantly, the policy
covers fewer workers than an across-the-board minimum wage
regulation. Therefore, the living wage
dollar figure can be set much higher while still maintaining a negligible
impact on the city’s budget and local businesses’ finances.
ACORN Canada
DOCUMENT 2 18
In our society, the concept of work is
essential to our identity. Although the
meaning of work differs for different people, we all can agree that work is the
fundamental way we reach our basic needs, as well as the needs of our
families. However, the issue for too
many is that working hard is simply not enough.
According to the Canadian Centre for
Policy Alternatives (CCPA), 19.2%, or almost 1 in 5, Canadian workers earn less
than $10 an hour. While levels of
education and experience have increased and productivity has grown, real wages
remained stagnant from 1981 to 2004 and median wages have themselves grown at a
snail’s pace (CCPA). Clearly, low wages
are a large part of why so many Canadians remain poor.
Most Canadians recognize this and
support efforts to raise wages for the country’s lowest paid workers. A poll conducted by Environics Research for
the Canadian Centre for Policy Alternatives indicates that a whopping 88% of
Canadians think increasing the minimum wage to a level that will raise workers
in minimum wage jobs out of poverty is an effective way to reduce Canada’s
growing income gap. More broadly, the vast majority of Canadians also agree
that government should take action to reduce poverty and income
inequality. More than 8 in 10 Canadians
(85%) say if government took concrete action, poverty in Canada could be
drastically reduced.
Despite the need to address working
poverty and the popular support for government action to do so, Canada’s
elected leadership has been disturbingly timid on the wage-raising front. And though all the major political parties
have publicly announced anti-poverty initiatives and platforms, they can all be
characterized as narrowly focused on the growth of public subsidies or tax
credits. None of these seriously
addresses the issue of the sinking wage floor – and the declining power of
workers to command higher wages from increasingly powerful and under regulated
employers.
The need for a grassroots living wage
movement in Canada is clearer than ever.
The Living Wage Solution
While raising the minimum wage is
essential to restoring the country’s wage floor, it is a solution that Canada’s
provinces have failed to adequately deliver on. A recent study by CCPA finds that not a single province in Canada
pays a minimum wage that lifts working Canadians out of poverty, and that
Provincial governments have allowed the value of minimum wages to be eroded by
inflation so that their real dollar value has flat lined or increased only
slightly since 1990 (Bringing Minimum Wages Above the Poverty Line, CCPA, March
2007). And while there are current
efforts underway to raise Provincial minimum wages, sufficient minimum wage
levels in every province are anything but guaranteed.
In the meantime, we believe another
model of wage campaign – the living wage – has the potential to result in
momentum-building policy victories and provides a great opportunity to change
the public debate about working poverty in our country.
What is a municipal “Living Wage”
policy?
A municipal Living Wage policy ensures
that workers employed by the city as well as those contracted using municipal
funds will be paid at least across the board floor level wages. These legally enforceable policies become a
minimal hourly wage guarantee for employees to earn a rate that exceeds the
legislated minimum wage. Fundamentally,
the government should not subsidize poverty wages. Living Wage policies are spreading and have been successfully
implemented in over 130 US cities, while several Canadian cities are currently
exploring the implementation of similar policies.
Municipal Living Wage policies offer a
great realm of flexibility. They can be
as broad or as narrow as the City determines appropriate. Living Wage policies can apply to city
employees, employees who enter into service contracts with the city, as well as
employees receiving economic development assistance from the city. Furthermore, any number of exemptions to the
policies can apply. For instance,
exemptions may occur for workers under a specific age, for contracts under a
specified amount, or for businesses or non-profit organizations with revenues
less than a specified amount.
What is the difference
between Living Wage and Fair Wage policies?
Some cities, like Toronto, have “Fair Wage”
policies that provide a good starting place for living wage campaigns to
strive. Because these policies are
based on prevailing industry wage standards in a given geography, they do little
to raise base wages for workers in the lowest wage industries and should be
expanded with a living wage law that sets a floor below which no contract,
regardless of industry, can go.
Why should Ottawa adopt a Living Wage
policy?
Among all reasons to adopt a living wage policy,
the City of Ottawa should take careful consideration of the following:
·
Adequate pay and benefits should reward hard work.
·
Research conducted by Dr. Peter Philips, a University
of Utah professor and economist, shows
that low income workers spend their paychecks locally, thereby stimulating our
local economy.
·
As the first Canadian city to adopt a living wage
policy, Ottawa will be recognized as an ethical leader and model for other
governments and agencies to follow.
·
Full-time employees should not be obliged to live in
poverty.
·
Public money should not be used to subsidize poverty
wages. Tax dollars end up being hit
twice with social and economic calamities, like homelessness, crime, and social
service funding.
What are the benefits?
Employers
Among several other benefits,
employers will notice an increase in job skills and efforts that will lead to
improved worker morale and attitudes toward work. Lowered employment turnovers therefore means lowered expenses for
recruitment and training as well as increased profits to improved corporate
efficiency.
Employees
Employees will now have more time to
spend at home with family. They will
see an improvement in their personal finances in such a way that they will not
only be able to catch up on late payments, but also create a nest egg for
future expenses, like children college funds and retirement.
A Living Wage allows for the ability
to actually have a quality of life while most importantly finding their
financial independence.
Community
Paying a Living Wage to workers means
that there is a decrease in the cost of community services which are invisible
due to current accounting methods. The
reductions include emergency medical care, food programs, housing programs,
drug and alcohol programs, as well as countless others.
Living Wage is a
thrifty method which enables communities to ensure that the most vulnerable are
looked after. This policy will make
Ottawa improve Ottawa’s quality of life by reducing crime, homelessness and
drug addiction, and increasing community pride. Allows families to grow and become a more solid institution
within the community.
Let us avoid the double
dipping into public tax dollars, and do it right the first time.
What are the downfalls?
Most studies show that minimum wage increases have
little or no effect on employment in terms of job loss. For instance, Los Angeles employers only cut
employment in the affected sectors by only 1%.
This small reduction is greatly overshadowed by the fact that people are
now earning a living wage. Furthermore,
allowing people to earn a living wage will allow workers with two or more jobs
to reduce their workload, thereby offsetting job loss and possibly even
increasing job opportunities for others.
More than 130 American cities have already opted
for a living wage policy. Analysis of
living wage campaigns in the US found that for most businesses wage and benefit
increases due to living wage bylaws will be less than 1% of total
spending. But this was offset by a
number of benefits to businesses, such as less labour turnover, increased
employee productivity, reduced training costs, better cooperation with
management, more flexibility in the operation of the business, and a higher
overall morale.
Living Wage Laws
We applaud the City of Ottawa’s
initiative to promote the minimum wage within the province. However, municipal governments are closest
to their communities and have tools to respond to the needs of communities. We are
asking the City of Ottawa to show leadership by putting its resources toward
poverty reduction.
Ottawa’s Living Wage policy
As previously indicated, living wage
policies require a higher wage for city employees as well as all employees on
projects for which public money was given.
Beyond this idea, however, we are looking to have implemented an annual
indexing of the living wage in relation to inflation. Ottawa’s Living Wage policy should also include worker friendly
provisions, like local hiring, and worker retention. Furthermore, the policy should reflect a clear language that
supports a worker’s right to organize.
We also wish to see included a greater
accountability from companies and government, such as government reporting and
company reporting in relation to wage levels and benefits. In addition, Ottawa’s Living Wage policy
should contain provisions for the creation of a public oversight board. Finally we want to see the implementation of
sanctions for the non-compliance of employers, including but not limited to
back pay to workers and “claw backs” of public money for broken promises.
“It is about being thrifty with our
money.”
What is the proper Living Wage for
the City of Ottawa?
In Canada, the most commonly used measure of
low-income is the Low-income Cutoff, or the LICO. This index shows the adequate levels of income for households
varying in sizes. LICO scores are
intended to convey the income level at which a family may be in straitened
circumstances because it has to spend a greater portion of its income on the basics
(food, clothing and shelter) than does the average family of similar size. The LICO score is updated each year with a
publishing date during the summer. In
2007, the LICO amount for a single person living in a city of Ottawa’s size was
$21,666.00 before tax. The hourly wage
necessary to reach this amount varies according to the number of hours
worked. The following table shows the
wage rates for different numbers of hours worked.
|
Hourly Wage Required to Reach the 2007 LICO (pre-tax) for a
Single Person, Cities 500,000 or more. |
|||||
|
Hours
worked per week |
30 |
35 |
37.5 |
38 |
40 |
|
Hourly
wage |
$13.89 |
$11.90 |
$11.11 |
$10.96 |
$10.42 |
|
Hourly
wage without benefits (adding $1.25/hr premium) |
$15.25 |
$13.25 |
$12.35 |
$12.25 |
$11.75 |
According
to Statistics Canada, Ontario employees from all industries worked an average
of 30.8 hours per week in 2008. However, the living wage would be best tied
to the pre-tax LICO amount for a single person working full-time for the full
year at 35 hours per week. In 2007,
Ottawa’s hourly rate would be $11.90 (rounded up to $12.00). Nevertheless, a premium of $1.25 per hour
should be applied in cases where the employers are not providing benefits. This premium would lead to a total hourly
rate of $13.25 per hour without
benefits. This rate would also be
adjusted automatically each year with the changes represented by the LICO.
Mitigating Factors
·
Ottawa is ranked as the 5th
most expensive city in Canada, and has moved up 23 spots from 2007 (Mercer Worldwide Cost of Living Survey,
2008).
·
The targeted jobs require more than a
30 hour work week.
·
Single person LICO scores are not
reflective of lone parental households which demand a higher hourly rate to
reach an adequate Living Wage. For
instance, a single mom with one child would require a minimum hourly wage of
$16.15 without benefits for a 35 hour work week.
·
Living Wage is geared towards a small
percentage of the workforce, thereby minimizing the actual impact on businesses
and the city.
How many contract workers within the
City of Ottawa?
As
previously mentioned, the Living Wage policy in Ottawa, when adopted will
benefit a few select categories of employees, which include
·
Direct city workers or public
employees,
·
Employees of city service contractors,
like janitors, landscapers, clerical workers and parking attendants to name a
few,
·
And employees of firms receiving
economic development money from the city.
A recent finding indicates that the
targeted employees from the direct city workers category are among a group of
477 individuals. However, we have yet
to ascertain the amount of city service contractors and employees receiving
economic money from the city. Most
importantly, the policy covers fewer workers than an across-the-board minimum wage regulation. Therefore, the living wage dollar figure can
be set much higher while still maintaining a negligible impact on the city’s
budget and local businesses’ finances.
Recommendation
Ottawa
ACORN, based on the LICO analysis and the social and economical benefits
recommends an Ottawa Living Wage at $13.25
per hour without benefits. We are
confident that the City of Ottawa can easily adopt this needed change
because: it will help reduce the cost
of poverty in our community; it is at an insignificant cost to employers; and
low-income Canadians deserve this relief.
Why Ottawa taking the first steps towards
eliminating poverty is so crucial?
(Source: Canada Without Poverty)
Living in poverty as a Canadian means living with insufficient
and often poor quality of food. It
means either living in poor quality housing, in homeless shelters and even on
city streets. Difficult and even
painful decisions are made everyday which involve trade-offs: pay the rent or
feed the kids, pay the electric bill or go to the dentist, buy a monthly bus pass
or invite friends over for dinner.
Canadians need relief from this stress and anxiety.