Opinion: Abandoning Vancouver’s living wage is bad economics

Apr 25 2023, 8:05 pm

Written by Christine Boyle, who is a Vancouver City Councillor with OneCity Vancouver, and Jim Stanford, who is an Economist and Director of the Vancouver-based Centre
for Future Work.

For many years, the City of Vancouver was a living wage employer — committed to paying City employees and contractors enough to live here.

The Living Wage is a bare-bones estimate of what two parents would have to earn, in order to support themselves and two kids in Metro Vancouver, including food, clothing, rent, childcare, and transportation.

That’s it. No luxuries. It is the absolute minimum it takes to live in our city.

We used to commit to paying people that wage. Not anymore. The current Vancouver City Council made a choice — that OneCity Councillor Christine Boyle opposed — to end this commitment.

This is an abhorrent decision. It is the starkest possible statement on who belongs in the City of Vancouver — and who doesn’t.

But paying a living wage is not just a matter of social responsibility. It also makes cold, hard economic sense.

You can’t build a great city for free. To build a cleaner, safer, more livable Vancouver, to restore our aging infrastructure and upgrade it to face the pressures of climate change, to build safe streets and vibrant plazas, takes a lot of work.

It takes investment. It takes people.

And people are harder than ever to hire. The unemployment rate in BC has fallen to 50-year lows, following labour supply shocks related to the pandemic, and our province’s strong economic recovery. That has created significant challenges for many employers, including public sector employers, in recruiting and retaining staff.

This means that employers need to present a better offer to current and prospective workers: to show workers they are valued and respected. What better signal could there be to potential City workers than to commit to paying them an evidence-based living wage?

The City’s decision sends the opposite message — that instead of investing and attracting people with great commitment to our city, it wants to cut short-term costs by nickel-and-diming its very lowest-paid workers.

This is reprehensible. But it’s also poor management. The City will soon find that its penny-pinching is stymied by the realities of labour market competition. We won’t be able to hire the people we need. And City services will suffer.

The cost of living increases every day. We all feel it, when we go to the grocery store or when we pay the rent. But working people feel it most of all. In real terms (after adjusting for higher consumer prices), wages have already fallen by an average of about 5% since inflation took off in 2021: meaning the typical worker can no longer afford the same bundle of goods and services they previously purchased.

All employers have a moral and economic obligation to recognize the cost-of-living crisis facing so many workers, and help them survive it. But the City has a special responsibility, as stewards of a healthy, sustainable community.

Vancouver paying its people the Living Wage is the right thing to do. But it’s also good for business.

The success of any business is built on people. This is true in every sector — but it’s particularly true in the so-called knowledge industries, like tech and film production, which are key economic drivers in our city.

Helping those sectors thrive, and attracting investment to them, means building a city where tech and creative workers want to live, build careers, and build families. That means high-quality urban amenities: walkable and livable streets, a vibrant culture, and high-quality city services. Attracting tech and creative workers without pushing out lower-wage workers requires building and maintaining a city that people of all income levels can call home.

Cities that have those enjoy a competitive advantage. They attract great people, they attract investment, and they benefit from the resulting boosts to small businesses, to the local tax base, and to City revenues. Those revenues can be invested into programs like housing, childcare, parks, sewers, and the environment, making the city an even better place to live.

But suppressing the wages of the City workers who maintain our infrastructure and deliver our services won’t do that. It will only erode the advantages we already have – until they have disappeared.

City Council’s decision to abandon living wages (for both City employees and contractors) is impossible to comprehend. The fiscal savings are likely to be outweighed by new costs associated with employee turnover, labour shortages, and contract flipping.

It’s a recipe for ill-paid employees delivering declining City services. Cutting wages isn’t how we lead. It’s how we fall behind.

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