Social Policy in Ontario

Sweet spot for low-wage earners: after-tax salaries of $30,000 or more a year

Posted on February 11, 2012 in Debates

Source: Toronto Star — Authors: Laurie Monsebraaten

TheStar.com – news
Published On Fri Feb 10 2012.   Laurie Monsebraaten Social Justice Reporter

Neserita Gascon sacrificed a teaching career and the joy of raising her two school-age children when she left the Philippines for Canada in 1985 to build a better future for her family.

But after working for nine years as a live-in nanny for a Willowdale family, Gascon developed a severe skin allergy to harsh cleaning chemicals and rubber gloves and had to quit.

The timing couldn’t have been worse. Her children, who by this time were 17 and 19, had just arrived in Canada. It was the mid-1990s, jobs were scarce, and the Mike Harris Tories were slashing welfare and social programs. Life on welfare was not the example Gascon wanted to set for her children.

By chance, Gascon learned about a free training program to become an early childhood assistant. It proved to be her ticket off welfare, out of social housing and, eventually, out of poverty.

The six-month program led to two years of daycare supply teaching, a full-time job, an opportunity to upgrade her credentials to registered early childhood educator (ECE), and a pay hike. Today Gascon, who recently turned 65, earns about $38,600 with benefits.

“When I got my full ECE — that opportunity — that is when I started to breathe,” she says. “I felt more secure, financially, personally and socially.”

Gascon’s journey is reflected in new Toronto research that shows low-wage workers experience the biggest jump in financial well-being, personal skills and connections to family and community when their after-tax incomes rise to between $30,000 and $40,000.

“This is when a single wage earner moves from merely existing to living,” says Peter Frampton, executive director of the Learning Enrichment Foundation, which is conducting the research in partnership with the University of Toronto’s Ontario Institute for Studies in Education (OISE).

“It is when they can eat a meal in a restaurant without feeling guilty and are able to pay all their bills in the month without having to choose,” he adds.

The ongoing research — believed to be the first of its kind in Canada — lends support to a 2008 report by the Canadian Centre for Policy Alternatives that pegged a “living wage” in Toronto at $16.60 an hour, or about $33,000 a year.

“We think this shows in very real terms what a person needs to earn to feel a sense of financial and personal well-being,” Frampton says.

In Ontario, a household is considered to be living in poverty when annual income dips below the Low Income Measure (LIM), or 50 per cent of the median income, after taxes.

By that measure, a single person with an after-tax income of $19,600 or less in 2011 is considered poor.

The new research suggests that it would take an additional $10,000 to $20,000 annually to boost a single person from grinding poverty to a life with a sense of well-being.

In Gascon’s case, when she earned her certification as an early childhood educator in 1999, she was able to move out of subsidized housing into her own apartment. In today’s dollars, her income jumped from $29,000 to almost $39,000.

“When it is your own apartment, you feel very motivated,” she says. “You feel more accomplished. More fulfilled. Proud.”

The extra cash meant she was able to eat out occasionally with friends and save for the future.

In 2005, she put a down payment on a $200,000, two-bedroom condo near the Scarborough Town Centre, where she currently lives.

The study, which looked at Gascon and about 60 other long-time child-care workers at the Learning Enrichment Foundation’s 17 daycare centres last spring, measured a number of variables, including how the workers’ quality of life changed as they upgraded their skills and climbed the non-profit organization’s pay scale.

The survey used five broad quality-of-life indicators including: financial well-being, self-confidence, access to services, human capital (skills and abilities) and family and community relations.

“In three of the five scales we saw a statistically significant difference between people whose income was less than $30,000 and people whose income was between $30,000 and $40,000,” says professor Jack Quarter, co-director of OISE’s Social Economy Centre. “They reported higher financial well-being, a higher level of human capital and family and community relations.”

But for those earning over $40,000, the scores weren’t really any higher, he says.

“Scores below $30,000 rose with increased income,” he notes. “But the big bump came above $30,000.”

The data doesn’t explain why that is. But Quarter’s hunch is that below $30,000, a person is still trying to make ends meet. By the time a worker is earning more than $40,000, they are approaching the middle-class and likely starting to take on more household debt such as a mortgage, which may lead to a feeling of financial insecurity.

Quarter and the Learning Enrichment Foundation team hope to find definitive answers during the next phase of the study this spring when they will conduct in-depth interviews with survey subjects. The study is expected to be complete by the summer and will be part of a forthcoming book, Social Purpose Enterprises: Case Studies in Doing Business Differently, to be published by the University of Toronto Press in 2013.

Hugh Mackenzie, co-author of the 2008 living wage study, is excited by the new research.

“It is the first time that somebody has come at this question from the different end of the telescope . . . ” he says. “It is very interesting.

“It doesn’t surprise me that it is such a knife edge, that it is a relatively narrow range of income that tells you the difference between feeling that you are not getting by and feeling that you are getting by.”

Mackenzie’s 2008 study, co-authored by Canadian Auto Workers economist Jim Stanford, used government tax and other data to calculate how much it costs to raise a family at a barely adequate standard.

“A living wage is envisioned as a wage that allows employees not just to survive (in minimal physiological terms) but to have a decent quality of life, to raise children to be healthy and successful citizens, to enjoy recreation, culture and entertainment, and to participate fully in social life,” the 2008 study says.

“To me, it all comes down to participation,” Mackenzie says in an interview. “Yes, you can live without a TV, you can live without a car. But in this society you are not a participant. You are just surviving.”

For example, children over age 8 who live in a family that can’t afford an Internet connection are not part of life in their community, he notes.

As companies like Caterpillar in London, Ont., flee Canada for low-wage jurisdictions in the United States, and governments like the city of Toronto look to save money by contracting out well-paying unionized jobs, Mackenzie and the team from U of T and the Learning Enrichment Foundation are hoping their work can change the conversation among government and business leaders.

As Quarter points out: “Minimum wage isn’t very much in Toronto unless you are perhaps a student or somebody who has additional forms of support.

“If you have to take care of yourself and you have children, minimum wage is not going to cut it in a city like Toronto,” he adds. “I think our research should offer some support for the argument for a living wage.”

Gascon is living proof. Her daughter, now 39, is a successful travel agent, married and living in Richmond Hill with two young children. Her son, 37, a forklift operator, is single and still lives with her.

“It was a lot of struggle and sacrifice,” she says of the time when her children arrived in Canada as teenagers. “They used to work part-time at McDonald’s. But I always tell them it was worth it.”

She is grateful to the Learning Enrichment Foundation for giving her the chance to put her teaching experience towards a meaningful career in Canada that allows her to earn a living wage.

“I just love the children and I love the job. I have friends from all over the world who work with me. I have a very good life.”

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Tags: budget, participation, standard of living

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