By Noni Mausa
Double Double — The Absolute Simplest Look at Wages and Pensions
One of the best loved Canadian drinks is the famed Double-Double, a
big coffee with two creams and two sugars from the Tim Horton’s coffee
shop chain. Millions of double-doubles warm grateful workers hands
and wake up their brains on the way to work each morning. Want to
raise a cheer from a Canadian crowd? Just toast the double-double.
But Canadian workers need more than coffee to see them through. They
need wages and pensions. How big do they need to be? In a time of
drooping wages and wavering pensions, we need to know. Let’s approach
the wages, retirement and pension discussion by simplifying it as much
Let’s assume that the work life extends from age 20 to 60. The work
that people do before and after those ages is balanced by people who
are not able to work at all, for whatever reason. We’re talking
averages here, spread across 33 million Canadians.
So for half your life you work, and for half (birth to 20, and 60 to
80) you don’t.
As you can see, on average every person working must earn double what
it costs him to live. That extra money pays for the child the worker
is before he goes to work, and the senior he is afterwards. For the
population of Canada to stay level, each Canadian must raise one
child, and he must support himself once he retires. What it costs to
do that is the “lifetime wage.”
How can we calculate that?
Well, to start we can set a lower limit. Each individual must earn or
somehow acquire no less than what he needs to stay alive. A rough
guess for that number is around $800/month. That’s in the range of
what single welfare recipients receive. I have no idea how they live
on that, but thousands of them do.
Full time minimum wage is roughly double that, about $1600/month
before taxes, about $1350 after. (Manitoba minimum wage currently
$10/hour.) This is still not enough to be a lifetime wage. Also,
most minimum wage jobs are not full time or continuous employment, so
the effective income from minimum wage employment is closer to welfare
Canadians are being exhorted to live responsibly, only bearing
children if they can afford to raise them, saving for their education
and also for the their own retirement. The smallest sufficient income
to accomplish this seems to be about double current minimum wages, or
about $20/hour in Manitoba, $35,000 to $45,000 per year averaged over
a working life.
Business won’t pay such wages if they aren’t forced to. But somebody
must. Why? Not for moral reasons, we’re not dealing with morality
here, just practicality. Whatever way you try to jig the numbers,
half the population depends on the other half just to live. In a
nation, these life-stages overlap so the burden levels out over time,
but effectively one half is always supporting the other.
Paying out to each worker less than double the bare cost of living in
a closed system will result in collapse or shrinkage of the system.
But suppose you don’t treat your nation as a closed system? Maybe you
can outsource some of the cost at the two “nonproductive” ends of the
lifespan. If you want to cut your costs to the bone so your workers
can be paid only their immediate costs of living, you have to tackle
the problem at the child end and the senior end.
At the child end, you can outsource the production of new workers to
other, poorer countries – i.e. depend on immigration for population
growth. That’s one thing Canada is doing.
StatsCan tells us “In 2006, international migration accounted for
two-thirds of Canadian population growth… in the mid-1990s, a reversal
occurred: the migratory component became the main engine of Canadian
growth, particularly because of low fertility and the aging of the
population… Around 2030, deaths are expected to start outnumbering
births. From that point forward, immigration would be the only growth
factor for the Canadian population…”
In Canada in 2010, of the 280,000 immigrants, 60% were “economic”
(adults ready to work.) Another 28% were classed as “family.” The
hard lifting of childbirth and childrearing and child mortality was
done by other countries with no cost to Canada. In fact, immigrants
pay a small but significant landing fee, $500 to $1000 depending on
entry class. We further maximized the value of the outsourced new
citizens by selecting capable applicants free of serious medical
At the senior end of the lifespan, you can cut elder supports as much
as possible. This is harder to do because elders are aware of the
process and often have younger relatives to advocate for them, but
though it’s going slowly, it is a work in progress.
A maximally efficient economy in a non-closed system would be one
where you import all your workers, keep them as long as you need them,
and repatriate them afterwards. But that is not a nation. Nations
grow their own people, they don’t rent them.
Canada-the-nation may not need to support home-grown population
growth, because we are a nation that encourages many cultures. The
fact that our immigration policy skims good citizens from poorer
nations doesn’t bother anyone except, I suppose, the poorer nations.
But Canada-the-nation must support seniors. Business won’t pay enough
in wages for workers to save money for retirement, and for many people
saving or investing isn’t a reliable strategy. Private business
pensions are becoming quaint luxuries (unless you’re in the government
or you’re a CEO.)
We pride ourselves on being a secure, stable nation. The chaotic,
competitive and short term business community won’t and probably can’t
supply that stability; only a government has the ability over
generations to ensure stability.
A centralized, national fixed-benefit pension, solid and boring and
guaranteed by the government, is the only practical approach for most
Canadians. Additional savings are fine, for people who can afford
them, but millions cannot. Cutting and privatizing senior supports
(Canadian Pension Plan, Old Age Security, and for the very poorest,
the Guaranteed Income Supplement) is the opposite of what
Canada-the-nation needs to be doing.
(This was written in the Canadian context, where our right-wing prime
minister is in the fast lane to transform Canada to conform more
closely to US antisocial policy.)