Calculating a living wage

906434_59732240.jpgThe Canadian Living Wage Framework calculates a living wage that would allow two income earners to support a family of four and assumes the following scenario:

  • A healthy family of four with two children
  • 1 child in full-time daycare, 1 in before and after-school care
  • Full-time hours of employment between two parents (What constitutes full-time hours varies across Canada, but is typically between 35-40 hours. For more information, visit here.)
  • One parent taking evening courses at a local college to improve employment capacity
  • Costs of living including transportation, food, rental housing, clothing, childcare, medical expenses and other
  • Inclusion of tax credits, returns and government benefits; namely child tax benefits

The living wage is the hourly rate of pay at which a household can meet its expenses once government transfers have been added and government deductions from wages and government taxes have been subtracted.

While the methodology accounts for a range of costs, taxes and benefits experienced by a family, it does not account for:

  • Credit card, loan or other debt/interest payments
  • Savings for retirement
  • Owning a home
  • Savings for children's future education
  • Anything beyond minimal recreation, entertainment and holidays
  • Costs of caring for a disabled, seriously ill, or elderly family member
  • Anything other than the smallest cushion for emergencies or hard times