The Math of Minimum Wage: It’s Just Not Enough

"Let’s do the math: The average Canadian household spends almost $8,000 a year on food. In St. John’s, the average two-bedroom rental unit goes for $785 a month. That’s more than $17,000 JUST for food and rent ..."

In an attempt to put more money in the pockets of low income earners, last month the provincial government increased minimum wage from $10.25 to $10.50 an hour. But some working poor say an extra quarter an hour isn’t enough to bring them out of poverty.

Let’s do the math: The average Canadian household spends almost $8,000 a year on food. In St. John’s, the average two-bedroom rental unit goes for $785 a month. That’s more than $17,000 JUST for food and rent.

Here in this province, someone working for minimum wage makes a little less than $20,000 a year. After food and rent, the minimum wage earner will have about $3000 left over. That’s $250 a month to pay for heat, light, transportation and everything else.

Katie Whelan knows what it’s like to struggle to make ends meet making minimum wage. She worked as a cashier at McDonalds before having a baby last year. Even though her partner makes $15 hour and she was collecting employment insurance, the couple struggled to support their child.

“There are days that we can’t afford food because with a family comes a lot of bills. We put off some bills often, because we need food for our child at least so he’s taken care of.”

Whelan says it’s impossible to survive on minimum wage and an extra $0.25 an hour is not enough to help low-income families like hers. So, this fall she decided to go back to school to study photography. For now, she’s surviving on a student loan and her partner’s $15 an hour.

“It causes a lot of stress really, but we still try and get through. Sometimes we have to ask for loans from family and friends and then pay them back … The days we do have all of our bills paid and formula and food paid for, we might have 5 dollars left to our name.”

While $0.25 an hour isn’t enough to help families like Whelan’s, it’s just enough to put pressure on small businesses. Vaughn Hammond is with the Canadian Federation of Independent Business. He says the local retailers will be forced to pass the increase off to prices paid by consumers.

“If they can’t increase prices, either they reduce hours, they reduce staff, they delay investment or expansions.” Employers can’t pay better wages if there’s just not enough money in the bank.

Hammond says tax reduction is a better solution. He says the provincial government should raise the threshold to remove low-income earners from provincial taxes.

“If the ultimate goal is to put more money back in the pockets of low income earners, it is not through minimum wage increases, because that’s harmful to small businesses. Government should look at the low income tax reduction program and that’s the vehicle to put more money back in the pockets of low income earners.”

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8 Comments

  • While the situation certainly is bleak, “the math” has not been “done” in this article.

    Only 27% of Canadian households are single-person households; the other three-quarters include two or more people. The article compares an individual’s wages against a household’s expenses, which assumes that there is only one wage earner per household. I don’t know what the average number of wage earners per household is, but I suspect that we’d get a better sense of the situation if we compared apples to apples.

    Going to school to study photography as a way to improve one’s financial situation is an incredibly poor decision, and my heart goes out to Ms Whelan. No sensible person would advise a young mother to take on a burdensome student loan in order to study what will almost certainly be nothing but a hobby once she graduates/drops out, so I’m left to believe that she doesn’t have anyone in her life that is able to provide her with sensible advice.

    It would seem the worst is yet to come for her family; I don’t believe even a drastic increase in the minimum wage would improve their situation.

    • Hi Minnie. Your comments are fair, but also lack thought. For starters, the fact that minimum wagers have to have 2-5 roommates to survive is indicative of minimum wage not being enough. No one wants 4 roommates. Also, I am a photographer. I get paid $50/hour. Which is 5 times minimum wage. It’s a profession, not a hobby. So please stick your foot in your mouth. You’d be surprised how much work there is. I am often turning down gigs like weddings and conferences/ceremonies, because i am so busy.

      • Hey Photog. Are you suggesting that minimum wage be increased so that a single minimum wage earner can live alone in an apartment, with no roommates? Have YOU done any math? Working professionals rarely make enough to live alone comfortably. Cohabitation is NOT a sign that min wage is too low; the assertion that everyone has the right to their own lonely apartment is nonsensical.

        Sure, YOU might be a professional (don’t bother telling us how many $50 hours you work per week, relevant facts would only muddy the waters), but that doesn’t mean every goof who takes a course will become a professional photographer — guarantee it’s a net loss for most, especially considering that freelance workers have to work their ASSES off to get a name for themselves, and missus got a youngster to look after. If you think a broke mom can waltz into YOUR job the day she graduates, maybe you’re the one with a foot in your mouth?

    • Hmm. Minnie. I think you missed the point: someone living on minimum wage CAN’T live alone, like I am DYING to, lol. That’s my takeaway from the peice anyway — that 3/4s of us are shacked up with others cos we gotta be 😉

      • Or cos we have families or friends or S.O’s that we live with. What is everyone’s obsession with living alone?! Since when is that the standard for “making enough money”?

  • Of course the business man will say that we should just reduce taxes. If it’s so hard to pay employees more than minimum wage, why are so many businesses in the high-rent downtown area doing it? it’s cause they care about their employees and know that you can’t live a decent life on minimum wage.

    • Hi Kerri! I totally agree employers owe their staff every penny they can afford, but as a business owner working 60 hour weeks to make ends meet, let me guarantee you that many “downtown businesses” like me are doing very good business, but between rent, unpredictable fees, and staff wages, some months we don’t even break even! Plenty of successful restaurants and shops are going belly up. usually because they didn’t pinch pennies. Here is the math of my situation: this $0.25 increase will cost my business an extra $440 a month, which isn’t nothing. If I had to pay my 11 employees an extra dollar an hour, that amounts to an extra $1760/month. Money that just isn’t there. ON a good month we only net $400-500 extra. And they’ll get that as a Christmas bonus or something.

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