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.”