The Voice of Canadian Credit Unions
Community Development / Economics /  •

Pay it forward

Living wage employers play a powerful role in reducing poverty

Every time the minimum wage is set to increase, business owners sound the alarm about potential job losses due to rising payroll costs.

Meanwhile, social justice advocates argue the minimum increases aren’t ever enough to actually lift low-income workers out of poverty. But in the last several years, a new approach to paying minimum wages has quietly emerged alongside legislated measures. The solution, called the living wage, is proving that employers can play a powerful role in reducing poverty, building community, and fostering the well-being of both their employees and their bottom lines. And Canada’s credit unions are taking the lead in propagating its growing impact on communities across Canada.

Rise of the living wage

The living wage is a rate of pay that allows workers and their families to live comfortably. In contrast to the minimum wage, which falls below the poverty line for full-time employees, the living wage enables workers to provide a standard of living for their families that goes beyond the bare minimum required for survival. It’s also a voluntary action on the part of employers, lending itself well to companies that care about their social impact.

“The minimum wage is a government response to working poverty. The living wage is an employer response to the same problem”
—Deanna Ogle

“The minimum wage is a government response to working poverty,” says Deanna Ogle, coordinator of B.C.’s Living Wage for Families Campaign, adding that it’s not an adequate solution to working poverty: one in three poor children in Canada have one parent that works full time over the course of a year. “The living wage is an employer response to the same problem.” The voluntary movement toward meaningful pay increases for low-income earners, which got its start in the U.S. in the 1990s, took hold in B.C. about eight years ago and has since spread across Canada.

“The living wage movement has been around internationally for 20 years,” says Tom Cooper, coordinator of the Ontario Living Wage Network. “There are 150 initiatives in the U.S, and, in the U.K., 1,600 employers have embraced it. We’re a bit behind in Canada.”

Discussions among social advocacy groups about how to reduce poverty in B.C. got the ball rolling back in 2007. “The living wage movement came out of an income stewardship project,” says Catherine Ludgate, director of community investment at Vancity (499,474 members, $19.1 billion in assets). “We were involved in a study with First Call BC Child and Youth Advocacy Coalition and the Canadian Centre for Policy Alternatives (CCPA), and we wanted something practical to come out of that study.”

What came out of it was the Living Wage for Families Campaign, which, with support from Vancity and others, began engaging B.C. employers interested in implementing living wage pay policies, including Vancity itself. “We were showing up at the table and providing funding, but we had not yet become a living wage employer ourselves,” says Ludgate. “It was important to us and our board that we be in this space in a meaningful way, so we made an application.”

Through its own certification process, Vancity worked with the Living Wage for Families Campaign to define requirements for all participating employers. “It’s very important for employers to both pay employees a living wage and deal with contractors,” Ludgate says. “For some credit unions, that was a showstopper, but this is where the low wage workers really are.”

Becoming a certified living wage employer took Vancity two years and cost the credit union a quarter million dollars — less than it expected. “Most of our employees were already making a living wage, so that was the easy part,” Ludgate says.

Becoming a certified living wage employer took Vancity two years and cost the credit union a quarter million dollars. It also saved $2 million in its second year by adjusting its procurement practices

Vancity narrowed down more than 1,200 service contracts to about five dozen that made up the bulk of its spend, and from there ensured it was affecting the most vulnerable workers. “The lawyers and architects already make enough,” Ludgate says. “It’s the contracted security guards and janitorial staff where we will work to make sure we’re buying from living wage employers. We will pay a premium for these contracts.”

By adjusting its procurement process and working more closely with contractors, Vancity was able not only to pay living wages, but also to save $2 million in its second year. “That’s because we were buying less unnecessary stuff. We took a different approach to working with suppliers. We held open houses for procurement to explain what we’re looking for — our vision, mission, values — and we got a different quality of responses to our RFPs.”

Growth of the movement

With Vancity as a catalyst, the living wage movement spread to Ontario. “Vancity held a roundtable and we had City of Toronto staff, public health officials, and other employers who all went back to their communities to start campaigns,” says Trish Hennessy, founding director of the CCPA. “Now we have living wage calculations for almost every province, but B.C. still has the most engagement.”

Fifty-one companies are now certified living wage employers in B.C., including five credit unions. And in Ontario, 80 employers have signed on, with Mennonite Savings and Credit Union (MSCU) (20,198 members, $947.2 million in assets) leading the charge for credit unions. “The living wage concept was in the back of my mind for the last five years,” says Brent Zorgdrager, CEO of MSCU. I talked to our VP of HR about how we should be striving for this. In mid-2012, we decided to do something concrete about it.”

Using Hamilton’s living wage calculation as a guide, MSCU came up with its own regional wage, and introduced it in 2013. “We boosted compensation for 12 of our staff, and we were the founding thinkers behind the calculation for the region of Waterloo,” Zorgdrager says. “Now there are 20 employers and 800 to 900 employees covered by the living wage in our region.”

MSCU initially ensured all its full-time staff were paid the living wage, and committed to covering parttime staff within 12 months. “The philosophy isn’t hard to rally around, but the challenges are how to implement it,” Zorgdrager says. “Moving to the living wage meant a boost of about nine per cent for about 10 per cent of our staff, and we wanted to ensure it wasn’t demotivating for those not receiving it. Now we’re looking at contractors so we can extend it to third parties.”

MSCU chose to structure its living wage as a subsidy and list it as a separate bonus on pay stubs. “They still see hourly wage and earnings according to service and competency,” Zorgdrager says. “The living wage bonus is a separate line item. The subsidy decreases as their earned base increases.” Encouraged by MSCU, DUCA Financial Services Credit Union (50,000 members, $2.2 billion in assets) started its journey toward becoming a living wage employer in 2014, and by December of that year, had upped its wages to meet the living wage calculation for Toronto.

“We wanted to do more than just philanthropy in the form of writing cheques. We weren’t so audacious to think we could solve these things, so the question became, how do we live that out?”
—Richard Senechal

“We wanted to do more than just philanthropy in the form of writing cheques,” says , DUCA president and CEO. “So we started doing research on income inequality and poverty reduction. We weren’t so audacious to think we could solve these things, so the question became, how do we live that out? Our approach is to pay market wages and a living wage premium. Twenty-five per cent of our people, including part-timers, are now covered under the living wage premium.”

At Connect First Credit Union (112,620 members, $3.9 billion in assets) in Calgary, adopting a living wage was also a natural fit. “Vibrant Communities Calgary cheerleads the living wage movement for Calgary, and we started funding their work,” says Teri Buckley, community brand manager for Connect First Credit Union.

“They brought the living wage idea to us and we worked with them to build a business case. We don’t want employees living under the poverty line.” And other credit unions are pledging to follow suit. Mike Moore, chief operations officer at Sudbury Credit Union (17,500 members, $350 million in assets), has just started the process. “We became aware of this last fall, and we got tapped on the shoulder because Vancity was involved. I shared the information with our HR department, and we set a goal to become a living wage employer. We aren’t fulfilling that for entrylevel positions, but we intend to close that gap.”

How to become a living wage employer

Employers looking to implement living wage policies can access wage calculators and local implementation resources if they live in a region with an existing living wage calculation. But the living wage movement is still so new in Canada that calculations don’t yet exist yet for every community.

“The CCPA calculates the living wage on request, and we can’t fill requests fast enough,” says Hennessy. “In order to get the living wage number, we have to look at different factors like child care, transportation, hydro, etc. We also try to ensure that whenever a community or employer wants the living wage number, it’s not just about the number. We talk through what it all means.”

B.C.’s Living Wage for Families Campaign offers a living wage calculator that allows for regional variations. “In Metro Vancouver, the highest expense is rent,” says Ogle. “But in the Fraser Valley, child care is the highest expense. Smaller communities like Revelstoke have higher food costs, and housing costs are high in resort communities.”

This explains why the living wage is $20.68 per hour in Vancouver, compared to $16.82 per hour in Prince George, the lowest rate in B.C.

“The $16.82 includes employee benefits, and it’s really reflective of what it costs to live in Prince George,” says Cori Ramsey, communications officer at Prince George-based Integris Credit Union (25,290 members, $6.4 million in assets). Ramsey worked with the Living Wage for Families Campaign to come up with the regional calculation after prompting from the credit union’s members. “At our AGMs we were getting asked whether or not we would become a living wage employer,” she says. “When we did the equation, we realized we were already paying the living wage for the most part.”

The rest was relatively easy for Integris. “We were just redoing our janitorial contracts, so we put a line item in their contract saying they were responsible for paying a living wage. We anticipated higher bids, so we just bumped up the budget.”

In B.C., paying third-party contractors a living wage in addition to employees is part of the certification process. “The employer puts together the implementation plan to show how they’re going to do it and what they’ll do when the living wage rate changes,” says Ogle. “The Living Wage for Families Campaign has an employer committee look at the employer’s implementation plan and ask key questions.”

In Ontario, a stepped approach allows employers to adopt living wages at the level they choose. “Step one is to pay a living wage to all staff — full time and part time,” Cooper says. “Step two is to pay contract staff at a later point — and to put together a timeline for doing so. For us, it’s often about opening a dialogue and ensuring employers are comfortable.”

Extended benefits of the living wage

For credit unions that have become living wage employers, the benefits have gone beyond employee well-being, Cooper says. “We’re starting to see more staff retention, increased productivity, less sick time, more investment in the organization. It’s a win for communities too. When people are earning more, they spend their money in the community buying local goods and services.”

“Some small businesses are hesitant to adopt the living wage … But it’s not as daunting as it seems. We’re looking into hosting small business seminars for businesses with questions about the living wage”
—Cori Ramsey

And while opponents argue it’s cost prohibitive for businesses, Integris has found the opposite to be true. “Some small businesses are hesitant to adopt the living wage, because there’s a perception that they wouldn’t be able to pay that much,” Ramsey says. “But it’s not as daunting as it seems. We’re looking into hosting small business seminars for businesses with questions about the living wage.”

The business benefits have been palpable for DUCA, which has seen membership increase as a result. “If we can provide fair trade banking and a living wage, customers will come,” Senechal says. “And they are. Our membership is way up this year. It’s the fastest-growing membership of any credit union in Canada.”

“This is a real leadership moment for credit unions to step in and adopt a living wage from coast to coast,” Ludgate concludes. “If credit unions could participate in the living wage calculation and become leaders, we could really impact poverty.” ◊


Living wage vs. minimum wage

An emerging trend led by employers, the living wage provides a more comfortable standard of living than provincially legislated minimum wages. Calculations are city-specific, and made, upon request, by the Canadian Centre for Policy Alternatives. To find out more about bcoming a living wage employer, go to: livingwagecanada.ca.

The stats: hourly living wage vs. minimum wage

C1_ENT payitforward MAPVancouver $20.68 / $10.45

Prince George $16.90 / $10.45

Calgary $18.50 / $11.20

Saskatoon $16.77 / $10.50

Winnipeg $14.07 / $11.00

Waterloo $16.05 / $11.25

Toronto $18.52 / $11.25