Should Vancouver and other municipalities in the region ever decide to follow New Westminster's lead and adopt a living wage policy, it might benefit some low-income workers at the expense of others, a new study by the Fraser Institute concludes.
To date, New Westminster is the only municipality in Canada to adopt a living wage policy, the report states. But anti-poverty groups like ACORN have been lobbying other municipal governments across Canada to move in the same direction.
Municipalities that adopt living wage laws require companies who work for the municipality on a contract basis to pay their workers a wage that typically is roughly double the prevailing minimum wage.
The Canadian Centre for Policy Alternatives sets the living wage for Metro Vancouver at $19.62 per hour – $35,708 annually for each working parent.
In B.C., the minimum wage is $10.25 per hour. New Westminster, which adopted a living wage law in 2011, requires contracted workers to be paid $19.62 per hour.
"The best available evidence from the U.S. serves as a cautionary tale for us in Canada about adopting living wage laws," Charles Lammam, the author of The Economic Effects of Minimum Wage Laws, concludes.
"When governments try to legislate wages, there's typically a trade-off – while some workers may benefit from a higher wage, their gain comes at the expense of others who lose as a result of fewer employment opportunities."
Lammam concludes that employers who are forced to pay workers a living wage often end up cutting back on jobs, hours and on-the-job training, resulting in 12% to 17% fewer jobs.
Lammam bases his conclusions on a number of studies done in the U.S., but his report cites no evidence from New Westminster that would suggest outcomes have been similar in Canada.
