While Ontario raised its minimum wage last month to $16.55, a study finds that this is still not enough to acquire necessities like food, shelter, healthcare, childcare, communications and transportation.
In assessing 10 regions in Ontario, the Ontario Living Wage Network believes the Greater Toronto Area requires the highest living wage at $25.051. It means an average person living in the GTA earning $16.55 minimum wage while working full time would be at a deficit of over fifteen thousand dollars a year. It means if they don’t cut basic expenses, their households will continue to fall behind financially. It means choosing to pay rent or buy food. It means never being able to save up for unexpected expenses or invest in improving financial outcomes — like acquiring a second car for the family so that a parent can access better employment opportunities.
What is a living wage?
Advocates and organizations calculate the living wage for an area to understand the cost of living and how much someone would need to earn while working full-time to cover their basic expenses. If the living wage is higher than the minimum wage, it could indicate the likelihood of economic hardship, even for people earning a legal rate. The calculation as presented by the Ontario Living Wage Network is a weighted average of the cost of a basket of goods and services for three types of households: two parents with two kids; a single parent with a child, and a single adult. All 10 regions assessed had higher living wages than the minimum wage, and all regions experienced an increase in living wages from 20222 to 2023.
Why does the minimum wage matter?
A significant number of people work jobs that pay minimum wage in Ontario, so any policy regarding the minimum wage could have a significant impact on the people who are paid that rate, as well as their employers. Between 1998 to 2018, Ontario had the highest growth of minimum wage workers as a percentage of total employees. 15% of all workers in Ontario earned minimum wage, while the Canadian average was 10%. 60% minimum wage workers in Canada are female, and 48% minimum wage workers are over 25 years old3.
Why is the living wage calculation so much higher in the GTA?
The GTA living wage is $25.05 while the average for the 10 regions is $20.97. In reviewing the expense calculations for a family of four as provided by Ontario Living Wage Network, the biggest contributor is the cost of shelter at $32,323 annually. This is significantly higher than the 10-region average of $24,648.
What are we seeing at The Compass?
We have been providing services to an increasing number of children, adults, and seniors in the last several years, which accelerated during the pandemic and hasn’t plateaued. The number of households we supported increased by 93% from January to June 2023 as compared to the same time last year; and the food we distributed increased by 72% for the same time period, totaling over 2000 households and half a million pounds of food. This is consistent with Food Banks Mississauga’s 2023 Annual Impact Report, which reported that almost 5% of the population of Mississauga now uses a food bank, which is an 82% increase from before the pandemic. 16% of the food bank users report that their primary income is from employment, which is also an increase from 14% the previous year4 5.
As we reflect on the minimum wage increase in Ontario, it’s important to recognize the $8.50 an hour gap between legally mandated compensation and a reasonable standard of living, with all the factors that affect affordability in between. The conversation isn’t only about adjusting the minimum wage and increasing the number and access of higher paying jobs. It’s also about reducing the costs of the four largest expenses outlined in the living wage study: shelter, food, transportation and childcare, which would significantly impact the living wage calculation and improve many households’ current economic conditions, as well as their future living standards.
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1https://assets.nationbuilder.com/ontariolivingwage/pages/110/attachments/original/1699276527/Calculating_Ontario’s_Living_Wages_-_2023.pdf?1699276527, accessed Nov 2023.
3 https://www150.statcan.gc.ca/n1/pub/75-004-m/75-004-m2019003-eng.htm, accessed Nov 2023.
4 https://www.foodbanksmississauga.ca/wp-content/uploads/2023/10/23-45_FBM_AnnualImpactReport_V7SMALL.pdf, accessed Nov 2023.
5https://www.foodbanksmississauga.ca/wp-content/uploads/2023/09/SMALL_TMFB-Annual-Impact-Report-2022-V12FINAL.pdf, accessed Nov 2023