Several public policy initiatives have received a lot of attention lately: a $15 an hour minimum wage, a basic livable income, free university tuition for low-income students (this one looks like it might actually happen). These initiatives seem positive; many progressives have applauded them loudly. But I, as usual, find myself in the position of the party-pooper. It seems up to me to say what no other progressive in the province is willing to say: none of these initiatives will address poverty or grow the middle class. Hear me out.
The minimum wage in Ontario has nearly doubled in the last twenty years. Has poverty shrunk significantly? No. Now I’m not suggesting we go back to a minimum wage of $6.85 an hour, certainly not. I’m not even suggesting that raising the minimum wage to $15 is a bad thing, but consider this: $15 an hour at full-time is just $21,000 a year after taxes. After rent, utilities, food, and a modest amount per month for transport that leaves just $4,200 a year —and that’s rent outside Toronto or Vancouver. And it doesn’t take much to chip away at that $4,200. The cost of a prescription or two, some new clothes, and (heaven forbid) a weekend excursion or two should do it. I think you see my point. Raising the minimum wage alone will not help people out of poverty. One look at how much the rent for a decent one-bedroom apartment has increased since the days of $6.85 an hour will show you that most of that increase has gone to line the pockets of landlords, not to helping low-income people build equity and enter the middle class. Raising the minimum wage alone will have very little long-term effect on people’s quality of life.
Consider that about 30% of all employees in Canada are employed in small businesses and small businesses have accounted for the majority of new jobs added to the economy since 2008. Of all sectors in the economy, small businesses struggle the most to response to an increased minimum wage. Sharply raising it would be one sure way to stunt that growth. And at the end of the day, your wage is in the hands of your employer. If they can’t afford to pay you to work 35 hours a week, they’ll cut you back to 24 or less. This, by the way, is why we see so many people working multiple part-time jobs.
What about a basic livable income? For the first few years it will be a real boon for some. Those who haven’t been able to make ends meet suddenly will, those who can only find low-wage part-time jobs will get a breather. But after those first few years, landlords will catch on that their tenants can pay more money. Suddenly a decent one-bedroom apartment doesn’t cost $800 a month, it costs $1000. The price of houses and condos continues to increase as well, making saving anything for a down-payment increasingly unlikely. Then, five to ten years down the road, our basic livable income isn’t livable anymore and we’re right back where we started.
What about free tuition for students from low-income families? How could I be against that? I, after all, came from a low-income family. Well, I wouldn’t be against it if I thought it would get them anything. The facts are as follows. One, the value of a bachelor’s degree has fallen dramatically over the past twenty years; today it’s worth little more than a high school diploma. Two, many of those low-income students will still need to incur debt in order to attend university; wages from a part-time job generally don’t cover rent, food, books, etc. Do the math and you quickly realize this is not a gift to low-income students, it’s a ruse encouraging them to pursue an education to nowhere so that universities can stem decreasing enrollments as a result of their flagging legitimacy.
Higher minimum wage, basic livable income, free university tuition for low-income students —when you follow the money in each of these cases none of it ends up in the pockets of the poor so they can build equity and better their standing. Ultimately, the vast majority of it ends up in the pockets of landlords and university administrators (who, by the way, get a much bigger portion of the pie than professors). And don’t forget where the money for all this comes from to begin with: us. The province plans to pay for these measures through tax, and not higher tax on the wealthy, not higher tax on corporations, nothing as innovative as a carbon tax or aggregate tax, just general income tax that we all pay. So, in the end, the working poor end up paying for the illusion that deceives them into thinking that their government cares about addressing their plight. They look at their surroundings, scratch their heads, and wonder why they aren’t getting ahead.
Now why do I feel as though I’m the only progressive pointing out this charade? I think there are three reasons. One, criticisms like these don’t get headlines or fit inside tweets; no one likes putting ink and effort into what isn’t likely to be read. Except me, I’m just weird. Two, after thirty-plus years of unrelenting austerity in this province, progressives will applaud anything that even looks progressive, even if it actually isn’t. They reason that maybe —just maybe— if we take this hit and don’t say anything it will mean something genuinely progressive in the near future. Oh, and if that last point sounds shockingly like an abusive relationship dynamic, that’s because it is. And three, our so-called progressive politicians and political parties in Ontario are ideologically bankrupt.
What do I mean by ideologically bankrupt? Allow me to demonstrate. Below are some progressive measures that actually would combat poverty and grow the middle class. You haven’t heard any of these ideas from our allegedly progressive political parties recently, at least not publically or as part of their platforms. I’ll leave you to guess why. Here they are:
- Expand OHIP coverage to include an annual amount for basic dental, eye glasses, and prescription medications.
- Reduce interest on all existing student loans to a 1% annually-compounded rate and allow payments to be as low as $100 a month.
- Build 250,000 units of quality, public housing all around Ontario, concentrated in areas where the real estate market is the most inaccessible. And finance the developments in ways that will allow the working poor to build equity while they make monthly payments. In addition to solving the homelessness problem this single measure would generate tens of thousands of jobs, improve the quality and price of rental housing, and stabilize the housing market by slowing the rise of house prices but also buffering them against a crash. Then, if needed, build 250,000 more.
- Reform the Landlord-Tenant Act so that it is less in favor of landlords and include some form of rent control.
- Repatriate Hydro One and incorporate it as an arm’s-length non-profit entity reporting to the Province. In other words, get our electricity provider out of the profit-making game.
- Begin meaningful education reform so that students actually get something of value from their primary and secondary educations. Move from a teacher-centered education system to a student-centered one.
- Establish a contribution-matching, no-risk public pension fund for low and medium income earners in Ontario and make retirement at 60 available with no penalty.
- Allow income-splitting for couples with one or two children under five years of age so that one parent can stay home and raise the kids, no daycare required.
If the above measures are taken in combination with a higher minimum wage and a basic livable income, then we will see poverty reduced and growth in the middle class. I know what you’re thinking now. How will all this be paid for? Fear not, those solutions are relatively simple as well:
- Introduce significant carbon and aggregate taxes and dump every penny into making public transit a superior option to owning one’s own car.
- Raise the corporate tax rate back to something reasonable. Currently, Ontario’s corporate tax rate is the second lowest in North America (the lowest is Texas). We should at least be on par with Quebec and New York State.
- Cancel all corporate welfare. All of it. If a car company fails, allow it to fail. Instead of being there with bailouts for our corporations, be there with a solid social security net for the employees to help them retrain and pay their bills while they find new jobs in industries that are actually viable.
- Extend sales tax to stock market transactions. If I have to pay 13% tax on a pair of socks, there’s no reason why an investment bank can’t pay 1% on its stock market transactions. This would also act as a buffer against uncontrolled market speculation.
- Introduce marginal income tax brackets so that income well above subsistence is taxed at suitably higher rates. Simultaneously, lower the tax rate on the lowest income bracket to 10%.
Taken together these measures may actually generate a surplus of revenue.
You may notice at this point that none of my suggestions involve herding more people through colleges and universities. Why? Because at the end of the day we still want people to pour our coffee, clean our floors, organize our department stores, landscape our cities, cook our food, and a whole host of other tasks that aren’t glamorous but are still important. Why shouldn’t the people doing this good, honest work be able to own their own homes and leave something for their children? Forty years ago, they could. There’s no good reason why that can’t be the case again. It’s certainly a better option for our young people than forcing them to spent four-plus years at university when they don’t want or need to be there.
Let post-secondary enrollment decline. It’s been too high for years. Only 1 in 5 jobs in our economy actually requires a post-secondary degree and yet 1 in 3 students who graduate high school in this province go on to pursue one. Allowing post-secondary enrollment to fall to where it naturally should be will only mean smaller class sizes for those who genuinely need to be there and less money for administrative paper-pushers and nonsense programs (degree in Outdoor Recreation, anyone?).
I hope I’ve been able to demonstrate an important but simple point here. Fighting poverty is less about how much money people have coming in and more about how much they have left once their basic needs are met. Any policy that leaves the average, single, working class person with little or no money left at the end of the month doesn’t combat the growth of the working poor, it sustains and encourages it.
And there’s the sucker punch at the end of the story —the reason why no one in power is talking about anything in this article: the working poor are not supposed to get ahead. They’re supposed to keep counting their blessings, going to work, and running on their hamster wheels while their landlords buy up more property and rent it back to them at ever inflating prices, the dream of ever owning their own homes and raising a family always just out of reach. And that is the way it shall be. Unless, of course, we change it.