Local industry should pay living wages if economy to survive

Bukkavor Foods Canada received much fanfare recently when it was given $1.3 million by Northumberland MPP Lou Rinaldi from the Rural Economic Development Fund and the Eastern Ontario Development Fund.

With 15 employees and promises of up to 50 jobs by Christmas, this is music to many ears. With the recent announcement by Transcom International that it was cutting 65 to 85 full-time people, the Bukkavor story is good news.

Amidst all the smiles and glad-handing, there was some troubling information. The company pays a minimum of $12 per hour, going up from there. That means at the low end of the scale the total annual income of a Bukkavor worker will be $24,960, if the person works a 40- hour week, 52 weeks per year. If that person is trying to support a family with two children, they are earning barely over poverty line wages.

According to Statistics Canada, the low-income cutoff, which measure the ability to buy basic needs like food and accommodation, for 2010, for a family of four persons (two adults and two children) is $23, 202. That is a mere $1,758 difference.

Another way to look at this is using the Low Income Measure, a slightly different statistics. It measures poverty in relation to what everyone else is making, not on purchasing power. In Canada, for a family of four, the amount is $37,164. So anyone family bringing in less than that amount is considered poor by Statistics Canada. The difference from the base wage at the company is more than $12,000.

It is also unnerving to watch is our tax dollars going to a company that does this. But who would speak out against this. There is no way on earth any local politician or economic development officer is going to complain or turn away a company no matter how low the wages. It would be political suicide.

Still, how can anybody be expected to support a family on these kinds of wages?

It is completely unfair to single out this one company. It is doing business like so many others in town, across the county, the province, the country, and, yes, even around the world.

And, as many would argue, we should be grateful for the jobs to our area. It is true, getting companies to locate in the region is hard work.  Incentives, like the various economic development funds, are necessary or else none would come. The wages are reflective of the realities of the modern global economy. Raising these issues is not only blasphemous, it is naive.

So rather than focus on a single company, it is necessary to examine the issue in a larger context.

The stagnation of middle-class and lower incomes over the past 30 years is at the heart of this discussion. While the economy, the stock market and executive pay have increased by huge amounts in that time, the median income for Canadians rose only 5.5 per cent between 1976 and 2009. The phenomenon is known as the income gap.

While the rich get richer and the fiscal distance between them and us keeps increasing, this very shortsighted vision is merely a race to the bottom. Think of it this way: if people don’t have money because of low wages, lost pensions or servicing huge debts, then who buys the goods and services?

Then, because nobody is buying stuff, companies layoff people. This means even fewer people have the means to buy goods and services. So, more layoff. Less purchasing. Layoffs. And, so the spiral downwards continues.

Henry Ford practiced something called welfare capitalism. It was an enlightened form of capitalism where companies saw the benefits of paying good wages and providing benefits as a means of building a strong, loyal labour force.

“There is one rule for the industrialist and that is: Make the best quality of goods possible at the lowest cost possible, paying the highest wages possible,” he said.

As the provincial election gears up, the Liberal government will no doubt be taken to task for the additional 300,000 people who sunk into poverty since the Premier Dalton McGuinty government took office in 2007. And, there will be plenty of critics who will jump on the failed poverty action strategy.

But, let’s be even sharper when we watch all the job figures being toss around during the campaign, as well. If these jobs are anything like the ones at Bukkavor, then nobody should be getting overly excited.  And let’s see what candidates have to say about shrinking the income gap, too.