Kelvin McCulloch reflects on Buckerfields’ Living Wage program, one year in.

Buckerfields Living Wage Program: What Happened?

Reviewing the Living Wage initiative, one year later

In 2017, Buckerfields implemented a Living Wage program for full-time employees.

The program involved paying employees a wage rate which, when combined with similar wages of a second income earner, was sufficient to cover all the essential living costs of the household in whatever region of the province the employee was located. Buckerfields’ program includes full employee benefits such as medical, dental, pharmaceutical, group life and RRSP contributions.

Overall, the intention was to ensure that Buckerfields’ full-time employees can spend their entire careers working in Buckerfields and have sufficient financial resources to meet their needs.

Employee Reactions

From the day the program was first announced, it produced all kinds of positive reactions and no negatives.

Under the new living wage program almost every Buckerfields employee received a substantial pay increase, especially new full-time employees with starting rates. Some increases exceeded expectations by a wide margin. Suddenly, the financial position of the employees was improved quite considerably. They were deserving and they were very, very appreciative.

What came as a surprise were the other changes. Following the announcement of the raises, a new air of excitement seemed to fill every store. Everyone seemed to have more energy and everything seemed to pick up, even with customers, a lot. And it’s stayed that way.

The changes have been profound and fully attributable to the staff, but it took the living wage program to get it going. When people are made stronger and more secure financially, they become energized, positively, in ways that contrast sharply with when their financial burdens are dragging them down.

The Financial Results

Buckerfields store payroll jumped by about 14 per cent. Salary increases for managers were kept to a bare minimum to make way for the new staff increases. The managers were excited for the staff and were thrilled with the new level of energy and enthusiasm.

Total costs won’t be known until the end of the fiscal year when annual cost comparisons are complete.

No matter what the financial costs, the positive outcomes have far outweighed them. No one doubts the sincerity or legitimacy of the living wage program. The proof goes straight to payroll every two weeks.

The Overall Situation

Make no mistake, Buckerfields struggles to meet the broader needs of employees just like any other small business. Not only are employees due fair compensation over the long term, they are due a respectful workplace under Employment Standards and WorksafeBC regulations, with proper attention to health and safety, new employee orientation, job training, accurate job descriptions, fair and progressive performance appraisals, merit recognition, workplace accommodation and on and on.

As a small business we struggle to get more than a C+ in all these areas because we don’t have the resources to keep up with everything all the time. What we do reliably is follow the only rule we really can follow day to day, the Golden Rule… This won’t get us an ‘A’ in human resource management. A good HR Coordinator is required for that.

Nevertheless, cash is king and it looks like we might get an ‘A’ for the living wage program this year.

The Reaction of other Employers

Every employer that we spoke with has complemented us for the living wage program, with some reservations. Some employers pointed out that their own employees have expressed expectations for similar treatment but the business isn’t ready for it. It’s made some employers uncomfortable. We apologize for this. Living wages aren’t for every business. You can’t pay what you don’t have and you shouldn’t have to apologize. There was no way we could pay the new rates either, until very recently.

But living wage rates are a worthy objective for any business, especially when you see what it does for the employees and the business. We think it is important to keep the concept clearly in mind. It’s a benchmark to try to achieve long term because it produces real business strength, economic stability, security and motivation. Wages that do not support a basic level of living produce turnover, instability, insecurity and all manner of other undesirable outcomes.

Real living wages lead to improved productivity, better financial results, trust and respect.

What are the Difficulties with a Living Wage Program?

There is a host of difficulties associated with a living wage program, beyond the cost.

The most difficult aspect might be the determination of the rates themselves. It’s one thing to say that if two income earners in a household in Kelowna are paid $20 per hour on a full-time basis they will have enough money to live a modest lifestyle. But what ‘lifestyle’ are we talking about? And what is ‘modest’? What information do you need to calculate the rates and how accurate is it? What are the assumptions that have to be made about living costs and lifestyles? Are the assumptions reasonable? Do the results correspond with reality? What about single people who have single lifestyles for whatever reasons?

Next there is the issue of regional disparity. How do you address the issue of skyrocketing house prices in one region versus another, zero vacancy rates, wildly fluctuating gas prices and other floating economic factors which vary from region to region? What about cultural differences that translate into cost differences? Three economists locked in a boardroom will not come up with the answers.

The other side of the coin is that every participant in the labour force has to find the answers to these questions in order to manage their life. Every employee has to solve the ‘living wage’ problem for him or herself and somehow make it work for their home over their lifetime. Wouldn’t it be helpful if someone provided living wage benchmarks in a credible manner for reference purposes? Young people entering the workforce could refer to the information for guidance. Others could consider the information for financial planning. Businesses could make long-range plans around the concepts and grow into the rates incrementally, year by year. Maybe there should be concessions to businesses that pay living wages, to encourage them to do so.

Ever since we announced our living wage program, all we have heard is positive comments from our employees, and members of the public. Months later, we still hear positive comments out of the blue. None of the comments has been negative. That’s pretty unusual. It really says something. We think it says that in the face of all the unsolved economic riddles, the political issues and the financial difficulties, the concept of paying living wages is valid and important.

Should Living Wage Rates be Mandatory?

The answer is a resounding ‘No.’ The labor market has to float freely and competitively to work efficiently, to afford the maximum number of jobs and to produce healthy business cycles. But publishing well-researched theoretical living wage benchmarks could give people and businesses an idea of what to strive for. We follow the weather reports all the time in order to plan our activities, even though the reports aren’t very accurate. Why shouldn’t we get reports on what wage rates we need to achieve, even if the rates aren’t precise?

Who Should Be the Authority on Living Wages

Even though efforts to pay living wages meet with widespread support and appreciation, no one will want the job of figuring out what rates to put forward as ‘living wages.’

We think the obvious choice for estimating and publishing ‘living wage’ rates is the provincial government. With names like ‘Labor,’ or ‘Trade Development and Skills,’ or ‘Social Development and Poverty Reduction,’ wouldn’t one of these ministries be well-tasked with this responsibility?

With any luck, the provincial government employs skilled economists somewhere in the organization with access to the best statistical and economic information needed to develop the rates? Couldn’t these economists put together living wage benchmarks and publish them each year along with the underlying data, assumptions and limitations so that we could refer to the information? Some of us might even want to pay the rates to our employees. We would prefer not to have to make the rates up ourselves, after all, economic analysis is not our business and it is within the business of government.

Setting benchmarks and publishing living wage rates is about economic leadership, helping people and businesses come together around fundamental concepts in the labour market. It doesn’t matter that the economists won’t be able to come to consensus or that the minimum wage is already so contentious and without foundation that it has no real meaning. What matters is that the concept of ‘living wages’ has enormous potential and our government is probably best qualified to develop and publish the information we need, on our behalf.

What Comes Next after Living Wages

Estimates of living wages merely serve as indices for what is required to meet basic living costs. But everyone is different. How do these differences play into living wage systems? Lots of employees try to differentiate themselves by maximizing the value of what they produce for their employers in the hope that they can advance and increase their incomes beyond the basic level. In short, how does ‘merit’ factor into the equation?

After the first year of living wages in Buckerfields we are going to have to address these questions and more. They are not new, but they are different in the context of living wages. At the moment, our answer will be to fall back on the Golden Rule, and we will do what we would want to have done on our own account, fairly and reasonably.

Summary

The idea of paying living wage rates seems to resonate with everyone for obvious reasons. Identifying living wage rates is very difficult, but best estimates are far better than nothing. The act of paying living wages is very, very rewarding and a cause for celebration. Not every business can pay living wage rates, but it’s a worthwhile objective for the future. Beyond the concept of living wages there are other considerations like ‘merit.’ Publishing living wage rates is a form of leadership, a good job for the provincial government.

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