September 26, 2020

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This is the second of a three-part series on the cost of living in Waterloo Region.

BY LAURIE SNELL

It appears as though the harder you work, the less you get paid in Waterloo Region. Flipping burgers, brewing coffee and working retail requires little to no skill, and shows the direct imbalance of high stress and low pay for minimum wage workers.

A report released to regional council on Sept. 6 suggested that the cost of living in Waterloo Region greatly exceeds average wages earned. By taking into account rising housing costs in the area alone, minimum wage is insufficient for most living expenses – a factor that directly corresponds to the increase in demand for emergency food and shelter services.

Deb Schlicter, director of housing for the Region of Waterloo, said, “the cost of a bachelor unit has gone up over the years and what people’s income is has not gone up to the same extent.”
With the regional report indicating a declining standard of living for a large part of the area’s population, and no immediate plans by the province to hike minimum wage, it comes as no surprise that individuals balancing multiple jobs have started demanding change.

Since 2010 the general minimum wage in Ontario has been $10.25 per hour, which is a 75-cent increase from 2009. The general minimum wage applies to most employees, with the exception of self-employed individuals, liquor servers, hunting or fishing guides and students.

The student minimum wage applies to everyone under 18 who works less than 28 hours per week. The Ontario Ministry of Labour increased the student minimum wage from $8.90 per hour in 2009 to $9.60 per hour in 2010.
The liquor servers’ minimum wage is notably lower than the other categories – something that stimulates great debate over the fairness of the practice. The liquor servers’ rate has increased from $8.25 in 2009 to $8.90 per hour in 2010 and can often be heavily supplemented by generous gratuities.

Regardless of the category a minimum wage labourer falls into, the report states these rates per hour are inadequate in sustaining a normal (or positive) standard of living. The report specifically looks at housing as an indicator of unfit wages – the minimum affordable housing wage for a bachelor apartment in 2012 for the region was $12.38, which is $2 more than the current minimum wage of $10.25. With the average bachelor apartment going for $644 per month, someone working for general minimum wage would need to work a minimum of 63 hours per month just to cover rent.

The report fails to directly state or examine that it has been almost three years since the Ministry of Labour has increased wages, despite the fact that each individual’s financial output – gas, groceries, medical expenses, insurance, heat, hydro, water and housing – continue to inflate each year.
The cost of gasoline is one of the most obvious examples of inflation – in 2010 the cost of fuelling your vehicle was about $1.10 per litre and has steadily increased to the current average of about $1.33 per litre. With the rise in fuel prices, other elements of every day life – like the costs associated with importing food and goods – have also increased.

With expenditures on the rise and income remaining the same, there is no question that debt or mismanagement of money is also an emerging trend. The ease and accessibility of borrowing money is becoming a necessary evil for low-income individuals looking to enhance or sustain their standard of living in the short term. Unfortunately, most people who do decide to borrow become caught in the trap of high interest and an inability to balance a chequebook.

In an economy that is still recovering from the 2008 recession, the debt cycle is becoming a harsher reality for minimum wage workers who provide for families, and individuals such as students, who have financial responsibilities such as school or rent.

Students are often misguided by the idea of a line of credit, credit cards or loans because they appear to be free money. Financial consequences are not emphasized enough when these contracts are drawn up. But students and non-students alike need to be aware that if they choose to supplement their income with any type of borrowing, the consequences of ruining your credit rating will stay with you for many years.
With banks offering post-secondary students introductory credit cards with limits ranging from $500 at TD Canada Trust to $1,500 at BMO, and average interest rates at about 19 per cent for cards with no annual fee, TD Canada Trust financial services representative Imelda Guevara urges borrowers to understand the types of deals they are agreeing to before signing up.

“A lot of institutions offer … student line of credit, student accounts and Visas too, so (students) have a lot of options,” Guevara said. She added that these post-secondary packages generally include a free bank account and lenience on payments for lines of credit – where payments (not interest) begin 12 months after graduation.

“A credit card is the most simple way to start your credit history because (credit ratings) are a big thing in life now. Eventually you want to get your own home, you want to get a mortgage to do so and your credit weighs that (option) because it just shows if you’re going to be able to pay back what you’re borrowing,” Guevara said, adding that even putting away $5 when possible will help individuals get into the routine of saving money – something she believes youth should be taught at a young age.

“People are not told enough about the value of saving money … economics are so important, but the everyday things that people deal with when it comes to credit and how you deal with your money – most people don’t know … There’s a reason why nowadays most people are in debt. Most people can’t afford it and are stuck in a dead end job and the mistakes you do early on really do effect you for a long time,” Guevara said. She added that if the Ministry of Education mandated a basic economics for everyday living at the high school level, most people would avoid ever having poor credit scores, understand the repercussions of missing credit card payments and what interest truly means long term.

Second-year journalism broadcast student Elysha Van Muyen works part-time to pay for school after being denied OSAP for this school year. “Minimum wage is not a livable wage,” Van Muyen said.
The 22-year-old is a supervisor at Starbucks and makes just above minimum wage. The Conestoga College student paid almost $4,000 for tuition, and with books, transit, food and other daily expenses, this is a clear example of the difficulty in finding balance with a never-ending list of responsibilities.

With protesters demanding a minimum wage increase to $14 per hour, many overlook the downside to such a drastic change. Local businesses often cannot afford to pay many employees, so part-time staff members are usually the first to be laid off while businesses adjust to higher wages; fewer employees means longer days for business owners, and ultimately, there would be increased difficulty for currently unemployed individuals who are actively looking for a job.

While most people would love to make more money and the local economy reaps the benefits of the initial spending impulse, the Ministry of Labour needs to calculate a figure that is a sufficient compromise, taking into consideration rising living costs, unemployment rates, the poverty line and development trends in the province as a whole.