Do Retailers Owe a ‘Living Wage?’

business_ethics_highlights_2 The notion of a “living wage” comes up pretty frequently. This story is about a proposal, made by a shareholder but rejected by a large majority of other shareholders, for a large Canadian grocery chain to commit to conducting a study of the feasibility of paying such a wage.

As the reporter points out, “A living wage is an hourly rate set by looking at an area’s typical expenses such as food, housing, transportation, child care and other expenses.” It’s generally substantially higher than minimum wage.

Of course, calculating ‘living wage’ that way implicitly assumes that employees actually are trying to make a living at this job. That sounds obvious, but it’s not: many employees (especially in retail) are not the stereotypical full-time employee supporting a family. Many are students and other part-timers who want to make a bit of money either to pay their way through school, or to support them while they do other things (like work as a musician or artist).

Such people might actually be harmed by higher wages. Why? Because if you pay a so-called “living wage,” you may attract more employees actually interested in making a fully living at the job, increasing competition and making it harder for the students and musicians to get the jobs (a process known as “job gentrification“.) So some will benefit from higher wages, but others will likely be hurt. How many people at a given retail chain are in each category? We as outsiders have no idea.

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LINK: Loblaw shareholders reject proposal on ‘living wage’ for employees (by Aleksandra Sagan for the Toronto Star)

By ALEKSANDRA SAGANThe Canadian Press
Thu., May 3, 2018
Shareholders of Canada’s largest grocer rejected a proposal that Loblaw Companies Ltd. determine the feasibility of paying its employees a living wage — one that varies by location and is calculated by its cost of living.

“Socially responsible companies contribute to the economic well-being of communities by providing direct and indirect employment preferably at rates that reflect the true cost of living. We believe the living wage reflects those costs,” said a speaker from Vancity Investment Management Ltd., which submitted the shareholder proposal at Loblaw’s annual general meeting of shareholders Thursday.

The proposal called for Loblaw to review the feasibility, cost and benefits of implementing a living wage policy for its employees, suppliers and contractors. It asked for the company to report findings to shareholders by the end of the year.

A living wage is an hourly rate set by looking at an area’s typical expenses such as food, housing, transportation, child care and other expenses….

What do you think?


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