Paying workers enough to live in Halifax is a “substantial burden” for employers, the construction industry told a committee of council, claiming the policy is “hurting the lower wage people.”
Representatives from three construction industry associations made a presentation to council’s Community Planning and Economic Development Standing Committee at its virtual meeting on Thursday outlining their concerns with the living wage requirement added to council’s social procurement policy in September. The requirement comes into effect for all new contracts on April 1. It means some contractors working with the municipality will have to pay their employees at least $21.80 — the current living wage as defined by the Canadian Centre for Policy Alternatives.
Melody Hillman, acting president and CEO of the Construction Association of Nova Scotia, led the presentation, telling councillors the policy will disproportionately affect small businesses.
“There will be substantial burden from an administrative, staffing, and human resources perspective, and many small businesses, who make up the majority of our membership, will not be appropriately set up to handle these extra burdens placed on them,” Hillman said. “We feel that HRM is trying to raise up smaller companies, so we feel that this current structure will likely do the opposite, and favour larger companies who are better setup to handle these complications.”
Hillman also warned of a domino effect from the policy, where all employees would get raises.
“If your junior level employees moved from minimum wage to $21.80 per hour, there needs to be consideration for what that will do to the supervisor that made $20 an hour, who will now need a pay bump, and their manager, and so on and so on,” she said. “You will be increasing your total costs more than you likely know.”
Having to pay workers enough to live will mean no contractor wants to bid on HRM jobs, Hillman warned, and that means paying more, too.
“A shortened bidders list means that less competition, potentially higher prices and not the best value for the taxpaying public,” she said.
In a recent report to council’s budget committee, finance staff at the municipality told councillors the policy is now expected to cost much less than the $8 million originally expected. In fiscal 2021-2022, the preliminary estimate is $123,040. That’s expected to rise to $161,091 by 2024-2025.
The policy doesn’t impact construction generally, as it excludes construction services. But Hillman said snow clearing and solid waste contractors are members of her organization and the others on the line.
“While we understand that, to many, it may seem that snow removal and solid waste management may not be considered construction, we assure you that the current accepted format does impact many of our members,” she said. “As well, we have great concerns that there will be scope creep, and that this will work its way into other areas, which will provide even more hurdles.”
Just this week, council approved new contracts for solid waste collection that mean those contractors won’t have to pay a living wage for five years.
While two councillors, Patty Cuttell and Trish Purdy, expressed sympathy for small businesses who will have to pay the living wage, councillors who approved the living wage requirement before the election challenged the industry representatives.
“It seems to me that what’s being most focused on are the things that are wrong with his policy but not the things that are wrong with the industry,” Coun. Lindell Smith said.
“This policy isn’t just about making life more difficult for the construction industry, it’s also about making life less difficult for individuals who are part of it … Do you not see there’s value in having these policies exist?”
Smith also asked about diversity in the trades, and whether the organizations believed the supplier diversity initiatives in the larger social procurement policy would make a difference.
Grant Feltmate, executive director of the Nova Scotia Road Builders Association, told Smith he didn’t think the living wage will help diversity.
“I think it will probably detract from the ability to get more diversity than help it,” he said.
Feltmate suggested the living wage could hurt lower wage workers:
In fact, there is some research out there that would indicate that if you put a living wage policy in, you actually are hurting the lower wage people, because the contractor then goes, “Oh, so I had two guys, or two folks working at $15 an hour and now they’re both supposed to paid $21.80. How much of those two people can I keep? Do I have to drop one? Do I have to drop their hours?”
So it is a slippery slope to go into the living wage factor. It sounds good on paper, but it has lots of negative possibilities and for diversity, I’d, like I say, I think we should be having discussions that are separate that are saying, how do we get the folks in? What is the best way to move them into the workplace because we have the demand, and we’re quite happy to have them, but we don’t have an easy way, we feel, I don’t maybe the wrong word, but we don’t have a good methodology for getting those folks from where they are to working for us.
Coun. Sam Austin asked the association whether it was opposed to paying the living wage. He never really got an answer. He said council went into this knowing that it would have those ripple effects on other wages. That was the goal.
“We were very deliberate in saying, ‘Yeah, that’s actually using the influence that we have as a large contractor to actually lift people, potentially out of poverty-type conditions out there,’” Austin said.
“I’m fine with further discussion with the associations here regarding trying to lessen administrative burdens trying to streamline those sorts of things, but the fundamental argument — should people continue to be paid salaries that are not enough to live on in this city? — I’m just not interested.”
No councillor made any motion or notice of motion following the presentation.
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