Fraser Institute critic targets city’s living wage
With other Canadian cities looking to follow New Westminster’s lead, the Fraser Institute has attacked living wage laws—saying they’re not aiding those they’re intended to help.
In 2010, New West became the first city in Canada to adopt the policy. So far it’s been the only one. The legislation requires all city employees and contract employees to be paid at a rate that keeps them above the poverty line, currently $19.62 per hour.
Fraser Institute’s Charles Lammam said several cities including Calgary, Ottawa and Waterloo, Ont., are contemplating similar legislation. However, his research on the experience in the US., where 140 cities have adopted it, reveals it actually hurts low-paid workers. While some benefit from a higher wage, the gain comes at the expense of others because of fewer employment opportunities.
“[Living wage laws] don’t do a good job of helping the most impoverished families. It’s not the way to go about it,” said Lammam. “There isn’t a free lunch with living wage legislation … My hope is before another Canadian municipality moves forward with this it considers the evidence.”
He admitted it’s hard to evaluate New Westminster’s experience because it’s only been around for a few years. But he said research in the U.S. where more than 140 municipalities have living wage laws shows it doesn’t do the job it was intended to do.
Lammam’s report notes one study of seven major cities found 72 per cent of workers benefiting from living wage laws weren’t poor to begin with because they’re skilled and productive. Of the other 28 per cent who were considered poor, only a third of them moved above the poverty line because of the legislation.
“It’s not helping the ones the most in need. It benefits the most productive and highly skilled workers. It has a bit of a perverse consequence if in fact the ones they are supposed to help are the ones most vulnerable,” said Lammam. “The ultimate impact, after all is said and done, is it will increase the cost of city services. City services are going to become more expensive and taxpayers are going to be on the hook for paying the increase.”
New Westminster Coun. Bill Harper, a strong advocate for the law in 2010, isn’t buying Lammam’s research for the public policy think-tank.
“This report as far as I’m concerned is a joke and a piece of political propaganda for right wing companies to blunt any sort of training and any kind of wage increases for those workers who are below the poverty line,” said Harper
New Westminster, he added, tried to set a good example for other employers in the city. “The increased wages, benefits and training give you a stable workforce and save you money in the long run.”
He noted the institute picked just seven cities out of 140 from a country that has one of the worst records in the world on labour issues, and the report ignored England where in his opinion it has been successfully adopted on many levels including by a number of reputable private companies.
“The rationale those companies give is that their work force is far more satisfied and far more stable,” said Harper. “They’re being able to live on what’s livable for a family. You don’t get this huge turnover where you have to train people.”
He said the Fraser Institute has consistently opposed minimum wages and employee training.
“They don’t care. The wage gap in this country has widened quite considerably in the last 20 years. We now have the highest rate of child poverty in Canada,” said Harper. “The marketplace has failed miserably, and that’s why we have things like food banks, homeless people on the streets.”
Harper said adopting a living wage law has worked well for New Westminster.
“What it shows to the contractors that come to the city is we expect them to pay fair wages and benefits. We consider ourselves to be a progressive council, and we got huge support from people in New Westminster on this issue.”