M. Haener Consulting Services Mhaener@telus.net March 2019 2019 NWT Living Wage M. Haener Consulting Services Mhaener@telus.net March 2019

Presentation Outline What is Living Wage (LW)? What is the purpose of LW? How is LW calculated? What is the NWT LW? What is the level of Annual Expenses, Government Transfers, and Taxes? What is the LW in other communities?

What is Living Wage? “… the hourly rate at which a household can meet its basic needs, once government transfers have been added to the family's income and deductions have been subtracted” (Living Wage Canada, 2015) Based on “…the amount of income an individual or family requires to meet their basic needs, to maintain a safe, decent standard of living in their communities (Vibrant Communities Calgary, 2012) Incorporates a bare-bones budget which includes: food, clothing, rent, transportation, child care, health care, adult education, some household expenses, and a small emergency fund. Enables working families to have sufficient income to cover reasonable costs ● Promotes social inclusion ● Supports healthy child development principles ● Ensures that families are not under severe financial stress ● Conservative, reasonable estimate ● Engenders significant and wide ranging community support ● Promotes the benefits of social programs such as childcare

What is the purpose of LW? Information for community Amount of income required to meet basic needs Indicator of living cost changes Indicator of local impact of government transfer programs Community–based policy or programs Municipal LW policy/bylaws Municipal low-income access/affordability programs Advocacy Increase support for working poor Higher minimum wages Benefits of paying LW and/or participation in LW Employer programs According to Vibrant Communities Canada (2013), living wage is a call to private and public sector employers to pay wages to both direct and contract employees sufficient to provides the basics to families with children (p. 1). Living Wages are not intended to replace government programs that target low income households. Living Wage advocates argue that, in addition to tax benefits and subsidy programs, policies which implement voluntary or mandated living rates can also play a role in ensuring that households can achieve a decent standard of living.

How is LW calculated? Canadian Living Wage Framework (CLWF) Indigenous family in Inuvik Budget expenditures Food, clothing, transportation, child care, etc Transfers that apply to each household Child support, Child care subsidies, GST credit, UCCB, AFETC, CCTB Tax paid Income tax, CPP, EI, etc Employment income vs After-tax income

How is LW calculated? CLWF calculation approach Annual Expenses = Before-Tax Employment Income + Government Transfers - Taxes Before-Tax Employment Income / Paid Hours of Work = Living Wage Budget expenditures Food, clothing, transportation, child care, etc Transfers that apply to each household Child support, Child care subsidies, GST credit, UCCB, AFETC, CCTB Tax paid Income tax, CPP, EI, etc Employment income vs After-tax income Step 1: Define household(s) and confirm budget items needed to reflect local living expenses Step 2: Estimate annual expenses Step 3: Determine government transfers and taxes Step 4: Calculate available income Step 5: Adjust employment income to balance budget expenditures and available income

How is LW calculated? CLWF calculation approach Budget expenditures Food, clothing, transportation, child care, etc Transfers that apply to each household Child support, Child care subsidies, GST credit, UCCB, AFETC, CCTB Tax paid Income tax, CPP, EI, etc Employment income vs After-tax income Step 1: Define household(s) and confirm budget items needed to reflect local living expenses Step 2: Estimate annual expenses Step 3: Determine government transfers and taxes Step 4: Calculate available income Step 5: Adjust employment income to balance budget expenditures and available income

What is the Living Wage in the NWT? Couple Family – 2 working adults & 2 children Yellowknife - Past Living Wage estimates: 2015 - $20.68 2017 - $20.96

Annual Expenses

Annual Expenses: Estimation Approach and Data Sources Food / Clothing & Footwear NWT MBM Shelter CMHC Market Rental Report Tenant insurance quotes Transportation Public transit & taxi Other Household Costs Survey of Household Spending (Statistics Canada) Childcare Cost of local providers & summer programs Health Care Health insurance premium quotes Conservative estimates of out-of-pocket expenses

Annual Expenses: Estimation and Data Sources Social Inclusion Cell phone, cable and internet Adult education – Aurora College tuition and material estimates Local recreation costs Computer, children’s toys, gifts - Survey of Household Spending Netflix account Restaurant meals – conservative estimates Vacation – Trip to Edmonton/Yellowknife/Whitehorse

Government Transfers Canada Child Benefit over $6,000 Income is too high to receive benefits through: NWT Child Benefit GST Rebate

Taxes Net Tax comes in at $12,000-$14,000 Includes: EI, CPP, Federal & NWT Income Tax Highest in Inuvik due to higher Net Income resulting from lower child care expense adjustment Greatest tax burden stems from: Federal Income Tax –$5,000 to $6,500 CPP - $4,300 to $4,600 Published tax formulas and indexing values

Living Wage in Other Communities

What is the LW in other communities? Whitehorse (2017) – $18.26 North East BC (2018) - $18.29 Edmonton (2018) - $16.48 Calgary (2017) - $18.15 Canmore (2017) - $25.28 Vancouver (2018) - $20.91 Victoria (2018) - $20.50 LW in other Cdn cities – p. 15 - $13 (Brandon MN) to over $20 (Metro Van)

Contact Information Michel Haener M Haener Consulting Services mhaener@telus.net 780-228-4464