HRSDC, Low Earnings and the Working Poor
An excellent article on issues facing the working poor in today’s Toronto Star cites a recent study by Human Resources and Social Development Canada in support of the employer counter-point that raising minimum wages would do little to help working poor families.
Indeed, precisely this point is made in an August, 2006 HRSDC Working Paper “When Working is not enough to escape poverty: An analysis of Canada’s working poor” by Dominique Fleury and Myriam Fortin. (I have a copy of this – publication SP-630-06-06E – but unfortunately can’t find it posted on the HRSDC web site.)
The argument is true by definition, but rather trite. The study defines the working poor as non students working more than 910 hours in a year, who also live in a low income family (by two definitions of low income.) Unsurprisingly, this means that the incidence of belonging to a working poor family is very heavily influenced by family size and by the number of earners in the family. Proponents of an increase in minimum wages to deal with poverty almost universally see this as a policy which has to be twinned with higher child benefits and higher rates of employment, rather than a silver bullet to fix the poverty problem. Drawing attention to family composition is a valid analytical point, but rather meaningless in policy terms unless one advocates removing children from low income families, or imposing minimum work requirements on all family members, or telling low income working women to find a higher earning partner.
Actually, the authors do go so far as to explicitly say that policies to help the working poor should target low earners in poor families, and implicitly dismiss the problem of low individual earnings as a non issue so long as the low earner is cushioned by family income. So much for any concern with the economic independence of low paid women, or of young adults.
Moreover, the study does in fact find that fully half of the working poor who are employees are also low paid, defined as earning less than $10 per hour. One could argue that low wages are, then, a significant part of the policy problem. Another part of the problem is that just 19.6% of working poor employees qualify for Employment Insurance benefits, a fact that is mentioned in passing rather than highlighted as a serious issue for HRSDC to consider in terms of its policy priorities.
That said, perhaps the most interesting and important contribution of this study is to highlight the fact that fully 41% of the working poor are self-employed, not employees. It would be interesting to know how many are really self-employed as opposed to “hidden employees”, a distinction which has been crucial in the recent analysis of precarious work by Leah Vosko and others.