Proceedings of the Subcommittee on Cities
Issue 2 - Evidence, April 23, 2009
OTTAWA, Thursday, April 23, 2009
The Subcommittee on Cities met this day at 10:48 a.m. to examine and report on current social issues pertaining to Canada's largest cities.
Senator Art Eggleton (Chair) in the chair.
[English]
The Chair: Today we are examining the matter of wages that are paid as they relate to poverty, and the difficulty and struggle many people who are wage earners have in that respect. This also brings into consideration the issue of minimum wage, which we heard a bit about in some of our past sessions and will hear more about today. We will also hear about it in the context of an exciting new living wage program in Calgary. A number of cities are getting involved in that kind of concept.
We have with us from Calgary Mr. Derek Cook, who works as a social planner with the City of Calgary, where he has been piloting the living wage policy through the city's decision-making process. As a past mayor of a city, I understand how long and complicated those processes can be. Mr. Cook appears before the committee today as an individual.
We have only one witness today, and when we are through dealing with the issues involving Mr. Cook, I want to have a little conference with the members of the committee regarding our forthcoming program, which will take us to the end of June, and our budget information. We will go into conference for that.
Mr. Cook, welcome. I will let you start off.
Derek Cook, as an individual: Thank you, Mr. Chair and honourable senators. I appreciate the honour of being here to speak with you about the living wage. I do come today as an independent, although I can speak to the experience that we have had in Calgary and a lot of the research we have done for our living wage policy there. Most of what I will be speaking about does have an admittedly Calgary and Alberta slant to it.
I would like to talk about the background of living wages and then how we understood that to potentially roll out into a policy with the city.
As you are aware, in 1995, the federal role in Canadian social policy changed fundamentally with the elimination of the Canada Assistance Plan and its replacement with the Canada Health and Social Transfer. This shift was accompanied by reduced levels of funding to the provinces. This move precipitated a massive restructuring of provincial social welfare programs across the country in an effort by provincial governments to reduce their spending through reducing benefits and tightening eligibility criteria.
One of the driving forces behind that restructuring was the belief that moving social assistance recipients off income supports and into employment was a better long-term solution to poverty reduction than continued reliance on income supports. We see that ideology reflected even in the name changes that occurred in Alberta. We had the Supports for Independence program; in Ontario, of course, social assistance became Ontario Works.
Since that fundamental restructuring occurred, the country has experienced, until recently, a fairly extensive period of prolonged economic growth. Calgary, perhaps more than any other city in the country, has been a primary beneficiary of that period of growth. Calgary has had one of the highest employment rates, lowest unemployment rates and fastest rising incomes of any city in the country. In that economic climate, the wisdom around poverty was that the answer to poverty was to ``get a job.''
If employment was the answer to poverty, then Calgary is most certainly the city where that answer should have been found. Was it? According to the most recent census, 14 per cent of Calgarians continue to live in poverty, virtually unchanged from 2001, and less than one third of those were receiving welfare. The rest were presumably working.
The working poor continue to clog Calgary's homeless shelters and food bank lines. A local survey conducted in 2006 during the height of the boom found that over one third of Calgarians were concerned about not having enough money for housing, and about one in five were concerned about not having enough money for food or clothing.
Meanwhile, the unemployment rate hovered at a record low, 3.2 per cent. Clearly, employment is not the direct route out of poverty that welfare reform proponents had envisioned. According to Statistics Canada, in 2004, about half of low-wage workers in Canada were the major income earner in their households. Of those, roughly one quarter were also in low-income households. In 2005, approximately two thirds of Alberta's poor were working and one third of those were working full time for the full year.
A key driver that is undermining the ability of employment to move households out of poverty has been the erosion of the value of the minimum wage. In 1976, in Alberta, the minimum wage was roughly equal to the low income cut-off amount. Since then, it has decline fairly consistently until the last couple of years, so that by 2006, the minimum wage provided income of only 78 per cent of the low income cut-off, LICO. That was actually an increase from two years before, when it bottomed out at 60 per cent of the LICO.
We are well aware of the costs of low-wage employment. Significant research has been done on what the impact of low-wage employment and low income is to households and families and to society. It costs us in the provision of an array of social services, such as social housing. Many provinces also provide various subsidies and wage supports to low-income workers, and often the cost of these programs, subsidies and services are borne by municipalities and cities.
There are also documented long-term costs related to poverty through reduced health and educational opportunities, all of which we bear as a society in the long term through reduced human capital and reduced productivity.
During the 1990s, many public authorities across North America began outsourcing many services previously provided by municipalities to the private sector in an effort to reduce costs. While this approach produced short-term savings, this was often the result of reduced wages by private sector firms that paid substantially less than the public authority. While this produced budget savings in the short term, it resulted in increased costs in other areas as low- wage workers increasingly turned to public supports and services to cope with the stresses of poverty.
It was in this context that there began to be support for policies and practices that would raise wages again to an agreed-upon acceptable level. The underlying philosophical position of such an approach is that working individuals deserve an income that, as a minimum, is sufficient to provide for their basic needs.
That line of reasoning is not new. In fact, it is reflected in the writings of St. Augustine and even in Adam Smith. However, apart from economic theories, there is a fundamental ethical question we need to face, which is whether we value people who work for our organizations — meaning cities or municipalities, in this case. Do we value them highly enough to ensure they can lead lives of dignity?
To put a human face to this question, I refer to a quote from a participant at a recent poverty forum in Calgary:
Try this: sleep on a mat at the shelter. Wake up at 5:30 a.m. Try to sleep with your head on a table until 2 p.m. Go to work at 3 p.m.; work until 1 or 2 a.m.; walk to the shelter and no mats are available at this time. Sleep on a concrete floor from 2:30 or 3 a.m. until 5:30 a.m. Get up and do it again for three days. Lose a day's sleep on Friday when the shelter closes for cleaning. Lose three to four hours sleep on Saturday standing in line for a change of clothes. Lose another two hours sleep on Sunday trying to do laundry. Monday your boss says this week we're giving you some day hours along with the evening shift. Now try to keep this job without losing your mind.
As public organizations, the ethical dimension of the living wage debate is even more critical, as it must be asked by each and every taxpayer: Should public money be used to keep working members of our society in such conditions of poverty or not?
In response to this question, over 120 cities across the United States have adopted living wage ordinances, which in the United States are essentially bylaws that require the municipality to pay wages that meet a basic minimum standard. In Canada, this policy approach is gaining interest as well. It is led largely by community-based coalitions in various cities. Living wage policies have been proposed or are being considered by the Region of Waterloo, Calgary, Hamilton, and to some extent Vancouver.
In Calgary, the impetus for a municipal living wage policy came from a coalition of community organizations advocating for the city to take a leadership role in its procurement process, and this led to the adoption in 2007 of the Sustainable, Environment and Ethical Procurement Policy. In that policy, there is embedded a clause that essentially gives preference to corporations that pay their workers a living wage. When that policy was approved, council asked us to explore the impact of making that optional clause mandatory, so we undertook about two years of research to provide council with what the impact of that would be. In April of 2009, we brought a report back to city council, which decided not to proceed with expanding the scope of our living wage program at this time.
In considering the impact of applying the mandatory living wage standard to suppliers, we discovered that we would need to apply those standards to ourselves, as a principle of the city is that we would not require a supplier to abide by conditions the city itself was not prepared to abide by. While all City of Calgary regular staff are earning above the proposed living wage rate, we found a small pool of on-call, casual staff who were not earning that amount. The cost of raising the wages of that small pool of employees would have been about $200,000. There would have been additional costs to raise the wages of those immediately above the living wage rate in order to maintain the integrity of the wage grid. The total cost to the city would have been between $400,000 and $500,000. We also worked with our supplier community to determine the impact on them. We determined that almost all of our suppliers also were already paying the living wage amount, and they did not foresee any substantial impact to them.
In considering the implementation of a living wage policy, several challenges were identified. The first was the challenge of establishing an appropriate living wage rate. Of course, in Canada, we do not have an official poverty line. However, the LICO has traditionally been used as a proxy for that. We based our living wage rate on the amount that would raise a single worker working full time for the full year to the pre-tax LICO for a single person, producing a local living wage rage of about $12 an hour.
Opponents of the living wage policy cited a number of concerns, primarily related to the potential impact on business, on low-wage employees and on the municipal tax base. As I mentioned previously, consultations with suppliers allayed our fears that this would have a substantial impact on suppliers or the city's procurement base. There were concerns about the possible dis-employment effects of such a policy, and that was certainly raised by council as a concern. Our research into the impact of such policies in the United States, however, suggested that the impact on employment has been minimal. Various studies conflict, but no substantial impact has been identified on employment. The impact on the tax base, however, was of greater concern, given the potential budget cost to the city.
Finally, council grappled with questions of jurisdiction, as it was argued that the establishment of minimum wages is a provincial matter, and therefore there was a question as to whether the adoption of a living wage policy by the city would mean the city was moving into a policy area over which it does not have authority.
It is important to be clear about the distinction between living wage and minimum wage, and that the city, as we embarked on a living wage program, did so in our role as an organization and as an employer and not as an order of government. We would be no different than many private sector organizations that have living wage policies that apply to their staff and those that they choose to do business with. However, as an order of government, I believe municipalities do have a responsibility to demonstrate ethical practice and to show leadership.
In conclusion, then, low-wage employment, as we know, is a significant contributor to urban poverty as wages have not risen sufficiently to offset the demands placed on the labour market by the restructuring of Canada's social security system. The costs of working poverty are substantial and are borne in large part by urban municipalities. To the extent that these are public costs, they represent a subsidy to low-wage employers who have benefited by the erosion of the value of the minimum wage over time. Living wage policies provide an opportunity for municipalities to address poverty through a market-based approach that has proven effective in cities across the United States. We believe that such policies can provide increased value to the taxpayer, reduce public costs overall and demonstrate leadership and good corporate citizenship. I will be open to questions.
The Chair: Thank you very much, Mr. Cook. The decision by Calgary city council not to expand the scope of the program just this month leaves council in the position that even though they support the concept, the living wage is an optional provision. If two companies are bidding on a contract with the City of Calgary and one of them says, yes, they are paying the living wage and the other says they are not, the one that pays the living wage has no advantage at the end of the day. The city would still take the low tender or the low quote. Is that how it will work?
Let me add in a few other things. You did not mention anything about the Chamber of Commerce. When I was in Calgary not long ago, I understood Calgary's Chamber of Commerce was endorsing this and trying to get it spread throughout the community beyond just the contracting provisions of the City of Calgary. Are they still a part of this program, still supportive of it? How will they help it to expand beyond where it is now as an optional provision?
Mr. Cook: With respect to the optional provision, the Sustainable, Environmental and Ethical Procurement Policy, which we refer to as SEEPP, has established a supplier code of conduct that establishes minimum conditions that we expect all of our suppliers to meet in the ethical and environmental realm. There are minimum conditions in there. In addition to that, a couple of areas have optional provisions. If a supplier can demonstrate that it exceeds the standard in these areas, it will receive additional points in the bid scoring process, so it does get an advantage in the bid process. However, it is not a requirement.
The Chamber of Commerce has passed a living wage policy for its organization and has been supportive of the city's efforts.
As I mentioned, in Calgary, as in other cities, these initiatives are being driven to a large extent by the community, so we have an active community coalition, Vibrant Communities Calgary, which is part of the Vibrant Communities network across the country. They are moving us forward. They have established a living wage leader program that recognizes employers who do pay a living wage. The Chamber of Commerce was the first recipient of the living wage leader designation given by our Vibrant Communities Calgary coalition, and the two organizations together are trying to spread this throughout the city. I believe that the City of Calgary would also qualify as a living wage employer in spite of the fact that we do not ourselves have a policy; we do meet the conditions that they would set out to be designated a living wage employer.
The Chair: What is the living wage as opposed to Alberta's minimum wage?
Mr. Cook: We have calculated the living wage at $12 an hour with benefits. Typically, in the United States and in other cities, there is a premium applied to that in lieu of benefits. If there are no benefits provided, typically it is $1.25 extra an hour. That would be a living wage of $13.25 if there were no benefits. Alberta's minimum wage is now $8.90.
The Chair: I will focus on minimum wage in my last question. There has been a debate, both in good times and in recession times, about the value of raising the minimum wage to deal with poverty. Some say it does not help and some say it does. Some say it helps to put more money into the hands of people who are particularly experiencing a challenge covering their costs of living. Others will say it will create a damper on the creation of jobs, and the creation of jobs helps to get people out of poverty.
How do you come down on that issue? How do you see it? It is of course a concern of the provinces that have minimum wages; they get a lot of pressure to increase them. We do have a minimum wage at the federal level, although it has not been exercised for a number of years. It has not been touched, and it only applies to a limited number of sectors, such as transportation, communications and banking, which come under federal control. Should we be looking at increasing that as well?
Mr. Cook: Various studies have been completed on the question of whether the minimum wage has any dis- employment effect, and the results are mixed. You will find as many studies saying it has no effect as there are studies that say it does have an effect. I am not sure there is a definitive empirical answer to the question.
I would say that if you look at the trend of the minimum wage, at one time it was certainly more in line with the low income cut-off amount. As I said, in 1976 in Alberta, the LICO and the minimum wage amount were virtually identical. The problem with the minimum wage was that it was not indexed, so the value of it eroded over time.
I believe that raising the minimum wage in a measured way would have some effect, but also indexing it would be appropriate, not only for those who are receiving the minimum wage but for the employers as well, because it provides some certainty. Now we have is a situation where the question about the minimum wage is politicized. We see it stagnate over time and then it jumps, and there is no certainty either to the worker or the employer about how that increase will take place.
I would suggest that raising the minimum wage and indexing it would provide some benefit for everyone.
The Chair: Including a federal minimum wage?
Mr. Cook: As you said, the federal minimum wage is somewhat limited in its scope; however, I would say the same benefits would apply.
The Chair: That will perhaps generate some more questions.
Senator Segal: Let me point out for the record that before our chair was Minister of National Defence, many lower- ranked members of the Canadian Forces had to deliver pizza and work in 7-Eleven stores overnight to try to make enough money for their families to live. When our chairman became the Minister of Defence, he fought long and hard to get their pay level raised to a point where they did not have to do that anymore. Our chair knows more about minimum living wages than perhaps he is letting on, very much to his credit.
My sense of the significant innovation and benefit in the program you have talked about is that Calgary is saying none of its employees will be poor because of the level of wages the city either pays or allows its major suppliers to pay. That is essentially what I think this leadership means, and I think it is extremely exemplary.
However, I think you would recognize that even in a place like Calgary, where you have had tremendous economic growth and benefits over a period of time, there is still a relatively soft underbelly of folks who will perhaps not ever be employees of the city or of its major suppliers, for whom the living wage initiative may have some indirect tertiary benefit because more money is spent in the community and they may benefit from that, but for them, it does not have much impact.
You were part of the municipal administration where there would have been a social affairs commissioner who would have been dealing with those questions straight on, and your city did have and continues to have challenges, not only with homelessness but also with people for whom whatever they can earn is so disconnected from the cost of living, not from the city but in jobs generically in the city, that they have trouble engaging.
Can you help us understand what the dialogue might have been between yourself as the proponent and manager of this program and your colleagues who were trying to deal with those other social pressures? Is there a learning opportunity there for the rest of the country in terms of best practices in some way?
Mr. Cook: Dialogue between whom?
Senator Segal: Yourself and the social affairs commissioner in your own municipal administration.
Mr. Cook: Within the administration? Calgary and Alberta are a bit unique in that we do not deal with those issues as directly as other municipalities and other parts of the country do. We do not administer welfare, for example.
Our primary involvement in that area would be through our homelessness initiatives; as well, we do fund organizations through our family and community support services program to deliver preventative social services. We are not as directly involved as a municipality in Ontario might be.
We did not have significant dialogue within the administration. Our internal dialogue was more around how we would make this work. There was a particular concern with respect to our recreation department, because that is where the bulk of the city's low-wage workers are.
There was a question with respect to the low-wage workers we are talking about who are very part-time. They are not regular staff. They are non-union. They are on-call casual. They may work a few hours a week. The perception was that they are typically students, not primary wage earners. We could be spending half a million dollars, so the argument went, to provide some kids with money to buy iPods, to put it bluntly, and whether that was the best use of those resources.
We thought that was an interesting hypothesis and decided to test it, so we did a survey of those low-wage workers. It turned out that a significant portion of them were not young people who were working for pocket money, or if they were, about half of them, although they may not have been the primary breadwinner, were living in low-income households. On average, they all had incomes below the city average. On the internal side, it came down to a question of whether we spend that money to support that population with that profile, recognizing that the living wage would not move any of those out of poverty but would have some benefit to them in their households. What impact would that expenditure have specifically on the recreation business unit and the costs of the services they would need to deliver?
Senator Segal: Just one supplementary, if I could. If it is not unreasonable or unfair, and I would not for a moment expect that you would be speaking on behalf of the municipal administration but just as a professional practitioner who has worked in the area, do you think if you could design the framework within which we all have to work, given that the state in Alberta and the rest of the country guarantees reasonable access to universal health care, is supposed to guarantee access to education between Kindergarten and Grade 11 or 12 or 13, is supposed to guarantee reasonably safe neighbourhoods through policing and the rest, would it be your judgment that the state should have a role in ensuring that people have the basic income they need, independent of whether they are lucky enough to be working for the City of Calgary or for Research in Motion, RIM, in Waterloo where they are doing fine, or perhaps elsewhere? Would it be your sense philosophically that we better not mess in that area, that it is best to let the economic forces work their way out?
Mr. Cook: Philosophically, I would agree wholeheartedly with you.
You are right; the living wage would not have, on its own, for the City of Calgary, a substantial impact on poverty reduction. It would provide some limited economic benefit to a small number of people. However, as I mentioned in my presentation, we were not approaching the living wage as an order of government. I think there was some confusion in the media, in the public and with council about what the living wage is. We are not approaching it as an order of government. We are approaching it as an organization that wants to do the right thing.
It really is an ethical decision, because income security is not the responsibility of the municipality. It is, however, the responsibility of the province and the federal government. You could say that income security is really the responsibility of three entities: the state, the individual and the employer.
Senator Segal: Would you use the same term? You said that ``ethical'' was one of the denominations by which your policy was decided. Would you say, going back to your last comment, that the obligation with respect to income security is an ethical one for the three different groups you referenced?
Mr. Cook: For all three, absolutely.
Senator Segal: Thank you very much.
Senator Dyck: I have a couple of questions for you, and your responses to Senator Segal help to some extent here.
I was curious about who the working poor are and what types of jobs are involved. You said that with the city they tended to be recreational workers, and the sense was that a good proportion of them might be students who were there temporarily or part time. Then you mentioned that you thought that because they were students, the city might not want to invest in wages for someone who might use the money for something like buying an iPod.
It strikes me that a wage is set not according to the person who is in the job but according to the duties or the responsibility of the job. Therefore, who occupies that position should be virtually irrelevant because they are qualified. Who is in the job should not be used as a basis for deciding whether or not you should boost the wage. It should be related to the position of the job. Is that a reasonable assessment?
Mr. Cook: I would agree with you that it should not be based on the characteristics of the individual, and it was our argument internally, as proponents of the policy, that what individuals spend their money on is irrelevant.
Senator Dyck: Yes.
Mr. Cook: However, we are also advocating for this policy because we are trying to provide benefit to low-income people who require assistance with meeting their basic needs. The argument on the other side was that you are not meeting your policy objectives, because the money that you are spending will not necessarily materially affect low- income workers — low-wage workers, yes, but low-income workers, no. That was the argument against.
I would argue, though, that it is also not a matter of ascribing a value to the job based on the market. We are trying to apply different criteria to establishing at least the low end of the wage scale, moving away from the market, to base it on ethical considerations, but based in terms of what a person would actually require at the bottom end. We are deliberately delinking wages from the market, to a certain extent.
Senator Dyck: I was trying to sort out who the working poor are. I do not know whether a study has actually been done with regard to the types of jobs that pay very low wages. Has a study ever been done where you can show the benefits of an increased wage, such as reduced employee absenteeism or increased employee productivity because they are being paid a wage that is fair, so that they work harder and are more consistent? Does anything support the advantage to such employers so that they are more likely to see the value to them in terms of their bottom line?
Mr. Cook: Several interesting studies have been done. In these debates about the living wage, many studies have come out based on econometric models that demonstrate that substantial chaos arises from the implementation of these policies. However, if you look at the studies that actually evaluate the impact of a policy after it has been implemented, they find a very different effect.
Very good studies have looked at the cases of Los Angeles, San Francisco and Baltimore, where they do find that workers are more productive and there is reduced turnover. Many of the costs that are assumed to accrue to the business do not, in fact, materialize, because they realize a lot of gains from that reduced absenteeism, reduced turnover and increased productivity; and that often offsets the increased cost of the policy to the business.
Senator Cordy: I know the living wage came about as a directive from city council, but did it come from within city council or did it come from the public within the city of Calgary, who said we have to do something to help the working poor?
Mr. Cook: It came from both. The genesis of the living wage goes back to the push for an ethical procurement policy, and that came about through a community coalition called the No Sweat Coalition, which was led by church groups, labour groups and community organizations. They were advocating with council to establish some standards that we would use in our purchasing policy. They worked with several members of council who were instrumental in bringing that to the council floor, and then that resulted in the administration being directed to embark on this work. It really was a partnership between several community organizations working with some members of council who were sympathetic.
Senator Cordy: I am just curious. Every time the minimum wage is increased in Nova Scotia, you get push-back from people who say that people will lose their jobs and the cost of living will go up, so it will not benefit them. Did you hear those arguments when you were trying to implement the living wage in Calgary?
Mr. Cook: Absolutely. Those arguments always come up. The Canadian Federation of Independent Business was very vocal in its opposition to this policy on those very grounds. That line of argument seemed to have some traction with certain members of council. There was concern that by implementing the living wage, you would actually be harming low-income workers by reducing employment opportunities for them.
However, if you look at the record of Alberta, between 2002 and 2006 there were several substantial increases in the minimum wage over that period of time. We looked at the retail sector, where a lot of the minimum-wage employees would be working. If there were an impact, you would expect to see it there. We saw employment increasing in those sectors despite the increase in the minimum wage. We have not seen any impact, in Alberta at least, of those minimum wage increases.
Senator Cordy: I agree that the arguments do not seem to have any justification, but you still hear them every time.
Mr. Cook: Yes.
Senator Cordy: Getting back to Senator Dyck's comment about the positive aspects of it that you have seen, have you determined any guidelines or measurements that you provide to the business community or whomever to say how the program works? I think the program is pretty new. Did it come out in April 2008?
Mr. Cook: Again, to be clear, our program at this point is limited to an optional clause in our supplier code of conduct, so it applies only to our contractors. That is an optional provision as well. The program is rather limited at this point.
As I said, we intended to expand the program to make that a mandatory clause and also to apply it to our on-call and casual staff, but council has not agreed to go ahead with that. There is not very much to measure at this point.
Our whole ethical procurement program is very new. That was 2007, so we have been working on it for only a couple of years, with a gradually expanding range of commodities. It would be prudent to do an evaluation of that at some point, but it is too early at this point to assess any impact.
Senator Cordy: Are you looking at an evaluation mechanism? Certainly, if you can prove the kinds of things we feel will happen as a result of this program, then it will be more enticing to other private agencies within the city to implement the same type of program.
Mr. Cook: Frankly, there is not a lot to evaluate at this point with the city. We were working with the health region, and I point out that the health region is also looking at a living wage policy. Likely in two to three months they will make a decision on that.
We were planning to do a health impact assessment of the living wage policy. Good health impact assessments have been completed in Los Angeles and San Francisco where such policies have been implemented, and they demonstrate significant benefits, both to the health of workers as well as to how that rolls out in cost savings to the municipalities. There is good American experience to draw on, but not much in Canada.
Senator Keon: Having listened to the testimony for the last couple of years in this area, I am convinced that fixing one little thing does not work. In other words, fixing income does not work because the problem is that the people who are affected are down and cannot get up. The reason they cannot get up is that they do not have the overall wherewithal to get up. They do not have the education; they do not have the well-being; and sometimes they do not have the health, the housing or whatever. You described that in your case report.
Until people get in sync and start organizing communities of well-being, we will never solve this situation. Until you take that poor person who is working for $8 or $8.90 in some parts of the country and find a way of wrapping the community around him or her and getting them up, educating them as to what they are capable of doing and educating them as to how to get access to appropriate information in order to get a better job, just providing them with a little bit of money, as you said, would not help and I would not blame them one bit for buying an iPod.
We have had too many potshots in this country, such as poverty, housing, health and education. We have refused to look at the entire person. Native peoples know enough to do this. They have been preaching this for a long time, and they will overcome their problems because of this approach.
I want you to comment on what I have just said. I know you are dedicated to trying to get people working for a decent wage, and I think it is disgraceful in this country that anyone has to work for anything below a living wage. There is no excuse for that. That will not do the job; we need much more. I would like to hear your comments.
Mr. Cook: I would agree. The living wage is not a panacea for poverty. As I mentioned, in Calgary it would affect a rather limited number of workers. In terms of its scope, it will not do that. As a municipality, we cannot pretend that we would be able to or be in a position to materially affect the poverty rate in the city. However, just because we cannot do everything does not mean we cannot do something and do the piece we are responsible for.
When you talk about wrapping the community around the individual, that requires a collaborative approach between a variety of actors — federal, provincial, municipal and voluntary sectors. Until there is a coordinated anti- poverty strategy or plan that can put those pieces in place, as you are suggesting, you are right: I do not think we will see an end to poverty. That does not mean, however, that raising income is not a very necessary and important thing to do. It will not solve poverty but it needs to be done, along with the rest of it.
I also believe that the living wage and the minimum wage is a rather blunt instrument for doing this because a living wage is only a living wage for a specific individual and a specific household circumstance. In our case, it was a living wage for a single person working full time. If you are supporting more than one person, it is no longer a living wage. If you are working part time, it is no longer a living wage.
It is an important thing to do. However, to really tackle poverty, we need to do what you are suggesting. I also personally believe that we need to move more towards a guaranteed annual income system where we provide that minimum security to people, and it is a far more refined instrument. I believe that also takes into account, as I mentioned, the three partners I believe we need to engage in any discussion about poverty, which are the state, the employer and the individual. All three are jointly responsible for income security.
Senator Keon: My old friend here is a big believer in a guaranteed annual income supplement. The detractors of that say fundamentally what I have just said, that you must do more than give people money. In fact, in some cases, you are doing them a disservice rather than a favour. However, with respect to someone who is down and out, I cannot imagine how you would do them a disservice by giving them money; I have to admit that. There is no reason why anyone in this country should not have an adequate income. There is plenty for everyone here.
Could you please comment about the evils of the guaranteed annual income, if there are any?
Mr. Cook: When we think about a guaranteed annual income, we have to recognize that we already have one; it is just too low and it is administered ineffectively. We have a guaranteed income in that we do provide a whole hodgepodge of income supports for people with various criteria and under various rules, but it is not sufficient and it is not efficient. The way we are delivering it now does not allow us to effectively do what you are talking about, which is to provide that coordinated approach to giving people all of the range of supports that they require in order to be successful.
Simply giving people more money will not necessarily solve any other issues that contribute to a person's circumstances. Again, it is a necessary thing to do; it is just not a sufficient thing to do.
Senator Keon: Are you a believer in the guaranteed annual income, despite its problems?
Mr. Cook: Personally, yes. I also point out the example in Manitoba, in the late 1970s, which introduced a guaranteed annual income on a pilot basis. A lot of the negative employment effects and so on that were ascribed to it did not materialize when it was evaluated. A lot of economic theory suggests that people will do one thing, but if we test it out we see that sometimes people do not behave as the economic theory suggests they will.
The Chair: A guaranteed annual income will be the subject of further discussion at this committee. We have already had one major round table on the subject, and there is more to come.
Senator Martin: Mr. Cook, we had a brief conversation prior to this committee meeting and a lot has already been said. Calgary is a sort of model city from having looked at this particular policy. As you said, it is a bit of an ethical decision. It seems to be a philosophy that is driving the decision to consider such a policy as well.
I like the fact that it is a community approach and requires the collaboration of many partners. I am particularly interested in the business piece. At times we focus on the folks receiving the minimum wage, but what about the businesses that have to decide whether to buy in or to take part in this program? If a policy were to apply, to comply, it would come out of their profit margin.
You said there were consultations and that the chamber of commerce was also working with you. I am curious about the conversations that you had with them and their decision to endorse or to take part. Perhaps that is a piece for other cities, if they were considering this policy and looking to Calgary as a model city. What could you be doing more or perhaps differently, if you were to do it again, with respect to the business community that you were working with?
Mr. Cook: Our work with the chamber of commerce was to involve them in our consultations. We had a series of consultations with interested community organizations, including the chamber of commerce, as well as affected businesses. We brought our suppliers in.
I would not say that we worked closely with the chamber of commerce. They supported us in, that they provided letters of support to council and publicly endorsed the work that we were doing. To the extent that they themselves adopted a living wage policy, they are walking the talk as well.
I should point out that our approach with our ethical purchasing policy, not only with the living wage but with all the provisions in that, is that we do not want to take a punitive approach. We do want to work in partnership with our suppliers. We said that it is not a matter of comply or not comply. It is a matter of this is the standard we want you to achieve, and if you are not achieving that standard, we will work with you to help you bring your operations up to the standard that we expect.
We would not be looking at cutting off a supplier if they did not comply with a living wage provision, or any other provision of the ethical purchasing policy. Having said that, we had a number of suppliers who were eager for us to embark on the ethical purchasing policy and also the living wage policy, because they said it levels the playing field for them. We have good, ethical businesses in the city, and they want to be rewarded for that. We should be rewarding them for their ethical practices, and they are being undercut by other businesses that can compete by coming in with lower wage rates, reduced environmental standards and so on.
When you bring everyone up to the same level, it takes that advantage away. It levels the playing field. Now in awarding contracts your bid process is based on the quality of service that can be provided to the municipality, not the lowest wage rate or lowest environmental standards. You end up with a higher-quality service to the public authority than you would under a straight competitive bidding process based solely on price.
In fact, in the city, although it is not a policy and it was not done for policy purposes, we did implement a mandatory living wage for our janitorial contracts, although we did not call it living wage. The quality of service was such that our supply department, independently a few years ago, instituted a wage minimum in those contracts to bring the quality of service up to the standard that the city required. Since we did that, we have resolved the quality issues we had with those contracts.
Senator Martin: From your own self-assessment of the work that you have done with the city and the group you worked with, if you were advising other cities on what they might consider, are there things you would have done differently or better? It is all a process and a journey and here you are, but Calgary is one city. Are there other cities looking at this at this time?
Mr. Cook: The most advanced city other than Calgary is the Region of Waterloo, which is in a similar process to where we are. I know work is also being done within the City of Hamilton. I believe those are the only cities actively involved.
There has been some interest with the party that just won the municipal elections in Vancouver. I do not know how far that has advanced at this point.
As for advice, one comment struck me in the debate at council. One of our counsellors said the city has no regular employees earning less than a living wage, so we should not be arguing about a policy; we should be celebrating that. In retrospect, if I could do it differently, I would celebrate that success more and be more congratulatory for the work we have already achieved without a policy.
I believe we do have ethical practices and we should be celebrating that. Yes, there are areas we can improve, but we need to celebrate the success that we have.
The Chair: I have an additional question. Having spent 22 years on Toronto City Council, half of them as the mayor, I am familiar with what we had as a fair wage policy. I believe it goes back to the end of the Second Word War. It certainly was in place all the time I was on council, going back to 1970. There was a fair wage office and a fair wage officer.
How it worked, as I recall, is that for a contract that was being let on a tender process, the fair wage officer had to certify that they paid fair wages. Fair wage was calculated on the basis of recent union agreements; they then took the average and determined that was to be the fair wage.
Some at city council had made efforts over the years to say we only give contracts to union shops, but that was decided against by the council. They decided on the fair wage policy. That has been in the City of Toronto for a long period of time. I think it has been expanded over time to take in more than just construction projects and such.
How is that different from the living wage? How is that working differently? Are there some changes you would see in the City of Toronto policy of fair wage that would bring it more into accordance with what you are doing in Calgary?
Mr. Cook: The origins of the fair wage are different than the origins of the living wage. I believe in Toronto it actually goes back to the late 1800s. It is a long-standing policy, and it is really to prevent non-union shops from undercutting union shops on a wage raise. The wages are substantially higher than what is proposed in the living wage process, and it is based on negotiations with the union to establish a fair union rate for that type of work. Typically, your fair wage policies are restricted in their scope for the range of services or commodities they would apply to, whereas living wage policies are much broader and are based on some independently established criteria, like LICO. The living wage is geared more towards the cost of living and what you need to do to reach that level of income. They have similar objectives but a somewhat different approach and background.
If you were to roll out the fair wage policy across the city and broaden its scope — I think it is mostly in trades at the City of Toronto — there would certainly be a substantial budget impact. There would need to be a lot of consideration as to how you would establish what a fair wage rate would be if you do not have a union to negotiate that rate with. It would be a very different process from the living wage policy.
The Chair: Thank you very much. I appreciate your coming here from Calgary and telling us what is happening on living wage and giving us your views on everything from minimum wages to guaranteed annual income. We appreciate your input. With that, this formal part of the meeting is adjourned.
(The committee continued in camera.)