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What is a living wage?

Employee salary binders on a desk. Stock photo by Getty Images.

While the minimum wage is the absolute legal minimum an employer must pay an employee, a living wage reflects a higher standard. The living wage mirrors what an earner must make to offset actual costs of living in a particular community.

Currently, Canadian employers are not required by law to pay a living wage.  However, some government and private employers have made the living wage mandatory.

In 2011, the municipality of New Westminster in British Columbia was the first Canadian employer to establish a mandatory living wage to be paid to all municipal workers and by all firms that are contracted directly or subcontracted by the City to provide services on City premises. As of August 2018, the living wage in Westminster is set at $20.91, while the minimum wage for the province of British Columbia is $12.65 as of June 1, 2018. Keep in mind these numbers tend to change from year to year.

The living wage is particularly targeted at families with children as a tool to lift them out of poverty, offer basic financial security, and ensure healthy child development.

The living wage is calculated based on the hourly rate required for a family of two working parents and two children to meet the costs of living once all credits — such as child tax benefits — and deductions are accounted for. In this calculation, the costs of living include transportation, food, rental housing, clothing, childcare, medical expenses, and other major items. The living wage calculations do not consider loan and mortgage payments, saving for retirement, or saving for children’s future education.

Read more:

Living wage Canada website

Living wage communities