Minimum wage increase not enough to live in “dignity”, says IRIS

MONTREAL – The minimum wage increase, in effect since Monday, is not enough to compensate for the surge in prices that workers at the bottom of the ladder have to endure, according to a report published by the Institute for Research and Socio-Economic Information (IRIS).

The least affluent households have been hit hardest by inflation, explains researcher Eve-Lyne Couturier in an interview. Essential goods such as food, housing and transportation take up a larger share of their expenses. “All three of these categories are seeing a larger increase than the average increase in inflation.”

By going from $14.25 to $15.25 per hour, the minimum wage increased by seven per cent. This is comparable to inflation, which is around 6.7 per cent in Quebec. However, inflation has been higher for the consumer basket of the less fortunate, the left-wing think tank points out.

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The sustainable income for 2023, an indicator developed by IRIS in 2015, for a household with two parents and two young children, increased by eight per cent to twelve per cent, depending on the region where that family lives.

“Not only does the minimum wage not lift people out of poverty or meet their needs, the increase, which is presented to us as a significant increase, still impoverishes workers who are on minimum wage,” Couturier says.

A sustainable income includes basic needs, but also the expenses necessary to “live with dignity”, including vacations, cultural outings and savings for contingencies.

Sustainable income varies from region to region, as does the cost of living. In 2023, a single person would need between $27,047 and $37,822 to live with dignity in Quebec, according to the IRIS report.

For example, the sustainable income for a single person is higher in Sept-Îles ($37,822) than in Quebec City ($31,104) because of the lack of public transportation. The report notes that a family looking for a four-and-a-half apartment in Gatineau would have to pay 23 per cent more for housing in 2023.

Couturier believes that the temporary assistance provided during the pandemic offers solutions to reduce the number of people living below the sustainable income threshold. These aids helped reduce poverty in Quebec in a “rather interesting way”.

In 2019, 8.9 per cent of the Quebec population did not have enough income to cover basic needs, according to the Market Basket Measure (MBM). That rate had dropped by almost half to 4.8 per cent by 2020.

In addition to the pandemic aid from the federal government, the Legault government also deployed one-time aid to combat inflation in 2022.

The researcher believes that Quebec should have found a way to provide assistance on a permanent basis rather than lowering taxes by reducing the tax rate of the first two tiers by one percentage point.

“People working at minimum wage full time are going to have a reduction in their disposable income at the end of the year of about $400 and people with incomes of $200,000 or more are going to have an increase in their income of $2,000 in their pocket.”

“You’re enhancing the incomes of people who already have a lot of money and penalizing people who have less access to income, who have lower incomes,” she continued.

Public investments in affordable housing and public transit are also a way to make it easier to achieve a sustainable income since they represent a significant portion of the expenses of the least affluent households, Couturier added.

This report by The Canadian Press was first published in French on May 2, 2023.