Nova Scotia’s ‘low-wage economy’ and the impact it’s having on people

The Nova Scotia public accounts standing committee heard Wednesday that the impact of low wages doesn’t just hurt the people who are struggling to live off them.

Christine Saulnier, the director of the Nova Scotia chapter of the Canadian Centre for Policy Alternatives, told the committee that “a low-wage economy’s negative impact runs deep.”

“When we have so many people who face barriers to reaching their full potential and are not paid their worth, their lower productivity has an impact on government revenue, in lower income and consumption taxes,” she said.

“In addition, we know that earning a low wage has a negative impact on workers’ health and leaves them scrambling to cover their basic needs. We all pay for the additional public health expenses and social benefits required to fill gaps.”

She said what’s considered a low wage should be compared against the living wage — what someone needs to earn to support their family and have a decent quality of life — which is estimated to be about $22 per hour in Halifax.

Those earning $22 per hour or less represent about 50 per cent of workers in Nova Scotia, Saulnier said.

She added that the province’s low-wage economy is also marked by a lower quality of jobs.

“The lower the wages, the more likely a job is to be insecure and not come with benefits,” said Saulnier, noting that only 31 per cent of Nova Scotians who earn $25,000 per year or less have access to paid sick leave.

“A low-wage economy reflects the value placed on certain types of work, and skills, and workers, and we need to understand why. It also exacerbates inequities by race, by gender, by disability,” she said.

“If COVID-19 has taught us anything, it’s that a lot of the people we pay the least are the ones we need the most.”

According to a report from the Canadian Centre for Policy Alternatives prepared ahead of Saulnier’s presentation to the committee, the impact of poverty in Nova Scotia costs just over $2 billion per year.

This includes $230 million in lost revenue, $279 million in additional expenses for health services and social benefits, and $1.4 billion in opportunity costs, which account for lost productivity and foregone revenue in the form of income taxes.

“The largest component of the costs of poverty is because of the toll poverty takes to limit a person’s productivity, and hence their earned income (not counting tax revenue loss),” the report said.

“Consider that this loss of $1.4 billion would be a gain if we address some of the root causes, including low wages themselves, but also unemployment, underemployment, discrimination, health inequities, and barriers to education and training.”

Saulnier told the committee that the province can no longer be “competing on the race to the bottom.”

“Addressing low wages, including by substantially increasing the minimum wage, reduces the need to use the tax system for redistribution, and helps stimulate overall purchasing power and aggregate demand,” she said.

Workers ‘fed up’

Danny Cavanagh, president of the Nova Scotia Federation of Labour and a member of the province’s minimum wage review committee, also spoke to the standing accounts committee Wednesday.

The committee had previously recommended the province raise the minimum wage to $15 gradually by April 2024. The current minimum wage is $13.35.

Cavanagh said he couldn’t speak on behalf of the committee, which is made up of representatives from both labour and business perspectives, but said he believes wages should be higher.

“As part of the committee, I certainly believe, and would have liked to have seen us get to a $15 an hour, at least, minimum wage a lot faster than we are, but we are on the path to get there,” he said.

“And frankly, $15, I don’t think is enough now for a lot of people to live on.”

Cavanagh noted that at $13.35, someone’s gross pay for a 40-hour work week — “if you’re fortunate to have a 40-hour-a-week job” — would be $534.

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At $15 an hour, it would go up to $600 a week.

“Just to put that in a bit of perspective, to fill an oil tank, right now, today, with furnace oil, costs about $2,200,” he said. “At the minimum wage rate today, that’s 4.1 weeks of work to fill your oil tank.”

Cavanagh said workers are “fed up” with low wages and part-time, casual jobs with inconsistent scheduling, and said this illustrates the importance of having more “good union jobs” that “provide benefits that help build the economy.”

He said the federation would like to work with the government to make that happen.

“We all want a province, at the end of the day, that’s a good place to live and work and raise our families,” he said, “and we’ll need to do that by working together and by listening to one another.”

12 per cent of Nova Scotians living in poverty

Tracey Taweel, the deputy minister of the Department of Community Services, said the department has a number of programs to help people and youth make ends meet.

“All Nova Scotians want to provide for themselves and their families, contribute to their communities and lead fulfilling lives,” she said. “Our work at DCS is to help Nova Scotians find success.”

She said DCS uses the market basket measure (MBM) to define the scope of poverty in the province, similar to other provinces and territories. The MBM calculates the minimum a person or family has to earn to afford a list of goods and services needed to reach a modest or basic living standard.

According to MBM data from 2019, the Nova Scotia poverty rate was 12.1 per cent, with a child poverty rate of 10.9 per cent.

While the poverty rate in Nova Scotia dropped to 7.7 per cent in 2020, Taweel noted that data included pandemic-era income supports, so that decrease is likely an “anomaly.” The data from 2019 is more reflective of the current situation, she said.

But NDP MLA Susan LeBlanc, a member of the standing committee on public accounts, questioned what those numbers say about the state of wages in the province.

She noted the Canada Emergency Response Benefit, which provided $2,000 a month for people laid off due to COVID-19, works out to about $15 an hour for a 40-hour work week.

“What does it say about the Nova Scotia economy that this benefit resulted in an improvement in household income in the province?” she said.

“Does that seem like we’re in a healthy situation, a healthy place, if $2,000 a month is an improvement and it actually is helping folks out?”

Saulnier said this bump in income shows that governments are capable of acting fast if they want to. “I think we need to take away some things from COVID,” she said.

No minimum wage increase

Nova Scotia Premier Tim Houston recently said there are no plans in the works to offer relief for those struggling with the skyrocketing cost of living.

“I disagree that we haven’t done anything,” he said at the legislature last week, referring to a $13.2-million package announced in March aimed at helping people on income assistance.

That package included extra funding for food banks and a one-time payment of $150 to people on income assistance and to those eligible to receive the province’s heating assistance rebate.

It’s unclear exactly how far that one-time payment would have gone to help those who received it, given the rapidly increasing cost of housing, food, and fuel.

As well, Houston said he is not considering accelerating the plan to implement a $15 minimum wage, despite that plan being put into place in January, before inflation reached the crisis levels seen in recent months.

During Wednesday’s meeting, Ava Czapalay, deputy minister of labour, skills and immigration, said the province must use a “balanced approach” when it comes to minimum wage increases.

“I do want to say again that the minimum wage rate impacts the lives of many workers, but also businesses, and it’s about striking a balance,” she said.

“If the minimum wage rate is too high, then businesses may look at part-time work or may make some adjustments that impact the workers even more.”

Her colleague Cynthia Yazbek, executive director of labour services, said minimum wage cannot be raised more than five times the rate of the consumer price index, or “you do start to see some negative impacts on employment in terms of business’ ability to continue to employ workers in their small businesses, in their workplace.”

As of April, consumer prices in Nova Scotia had increased by 7.1 per cent over the previous year. LeBlanc pointed out that five times seven is 35.

“It seems to me that at this point, with the CPI so high … I think we could probably figure out a $15 increase a lot quicker,” she said.

Fellow NDP MLA and committee member Claudia Chender asked if the province would consider bringing back the minimum wage review committee, or raise the wages in an “emergency fashion” outside of the committee’s recommendations, “recognizing the impact low wages are having on our economy and ask them to reconsider the available information.”

Czapalay said the minimum wage review committee is the mechanism the province uses to set the minimum wage, and currently has a vacancy that needs to be filled before it can meet again.

“It’s important to have both the employee perspective and the employer’s perspective and to have that advice coming forward in that balanced way,” she said.