Wednesday, January 6, 2010

Living Wage...More Like Living Nightmare

Wow, my wife told me about this yesterday and I'm still fuming over it today. As part of her public nursing she had to sit in on a "lesson", "sermon", I'm not sure what to call it. She was afraid to speak up and I can't blame her. It would be like ending up in a gay bar and trying to spout off the sins of a homosexual relationship. Or on the flip side shouting the benefits of a homosexual relation in a strict southern baptist church. No matter how absurd the comments seem to you, you either look for an exit or bite you tongue and wait for the end to come.

So, what am I so upset about. Well the whole thing actually. The horrible treatment of the poor, including not taxing the rest of us enough to buy them a nice home and fancy clothes for one. Minimum wage being too low to live off of (which I had already planned to address in some future post anyhow). Along with a slew of other things that just get my blood boiling.

What really took the cake though is the Living Wage suggestion. If you don't know what it is, it's a minimum wage that is set based on the cost of rent. They've determined that rent should be affordable for everyone that is working 40 hours a week at no more than 30% of your total income. Unlike the minimum wage it doesn't require legislation to rise. So if the cost of rent goes up, so does your wage.

That equates to $16/hour in Vancouver!!

So why does this get me so upset? Well, it's because I picture some 12 year old kid working at McDonalds earning $16/hour, while a Software Developer that just spent 20,000 on an education is doing a co-op for $20.

I see the potential disaster for this being incredible! How much does a Big Mac cost when you have to pay your employees that much? How many people do you think a company can keep employed at that wage? Why would anyone go to post-secondary when you can get a job that pays that well out of high-school? Heck, why finish high-school?!?

What happens to the rest of the industry? Does a Doctor's wage sky-rocket the same amount as well? If so, they still have the same margin over the minimum wage person as they did before. Which means they buy more, which pushes prices higher until the minimum wage isn't enough again. "That will be 1 million dollars for that milk please sir." Crazy!!!

Finally this is just an escalating nightmare. With the increase in people able to afford rentals while the supply remains the same the rents are going to sky-rocket. Which of course increases the wage again. Can you say "spiral of death"?!?

Another problem that occurs with increased wages is that it becomes cheaper to replace the labour. Already we're seeing self-checkouts at grocery stores, but it wouldn't be that big of a stretch to see these at fast food places. Automated floor cleaners like the automated vacuums, etc, etc. Entrepreneurs are a resourceful bunch after all.

If labour isn't replaced, the other option to the business owner is to not hire full time employees. After all the living wage only applies if you work 40 hours a week. So more jobs end up going part time and people are then forced to work 2 part time jobs at $8/hour a piece. Not exactly the solution they were hoping for eh?

OK, so maybe a little dramatic. I realize that this would probably balance out in the long run. After all, I'd want to get in on these higher rent prices while I can. Builders will jump at the chance to build more apartments to rent out and investors will jump at the chance to supply them at that cost. Of course increased demand in real estate will force that market up too.

I'm all for helping someone get on their feet, but I don't see why we feel the need to help someone sit their fat ass on the couch. We're saying it's OK, not to push yourself, not to go to school. It's OK to piss your money away on drugs and alcohol. It's OK to make horrible decisions. Because no matter how little ambition you have you will be able to afford rent, be given clothing, and given a job that pay 3 times what it's worth.

Phew! Glad I got that off my chest. Now I probably made other people that are reading this feel like my wife did in that meeting. However, if you disagree I promise to be gentle. ;)

I was trying to keep the blog to once a week, but I have too much bottled up, so I'm going to up this to twice a week for now. Monday and Thursday I think.


  1. I think you made a lot of valid points...or questions. I'm all for helping people out and giving them a good start, but I agree that increasing wages for that purpose may not help. After all, everything else will have to increase and where does that get us? Back to square one! We need to make it more enticing or maybe easier for people to get on their feet again. But I"m not too sure how! :( Was the Public Health speaking on this Living Wage and that's what got you going or did it bring you to these thoughts? just curious!

  2. They were speaking on this Living Wage too.

    I think we need to help those that truly need it. Minimum wage is not discriminatory. So it applies equally to a kid getting started in the work force, to a lazy addict, to a struggling mother newly divorced with a deadbeat ex and no skills.

    Let's help the drug addict get off drugs and start a new life. Let's provide assistance to the new single mother. But we should only help them to the point that they can help themselves. If we give them everything they want for free, what's the incentive to work harder?

  3. Have you read The Tightwad Gazette (at the library in three volumes from a newsletter in the 90s) -- how to make the most of what you have to get what you want/choose. One thing that stuck with me from a nonreligious article on Thanksgiving was a quote: anything you have that you didn't have to work for is a gift (education, family background, country, talent, even the work ethic) -- others many not have the same gifts.

  4. @Anon: No, but I'll add it to the list. I like the quote. Not sure I understand the connection to Living Wage though.