Minimum Wage Discussion in Thunder Bay

October 19, 2013

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THUNDER BAY – Discussion on minimum wages was the focus of a public meeting of the Minimum Wage Advisory Panel.

Supporting injured workers and working for the rights of workers is a focus of the Thunder Bay & District Injured Workers’ Support Group .

Here is the presentation by Vice President Greg Snider and Treasurer Steve Mantis to the Minimum Wage Advisory Panel made on October 18, 2013 in Thunder Bay, Ontario

Main Points

1) We support increasing the minimum wage to $14.00 per hour and recommend pegging it to inflation on an annual basis.

2) Increasing the minimum wage can have unintended – and disastrous – consequences for thousands of permanently injured workers in Ontario.

3) Public discussion of increasing the minimum wage is positive and has already created change.

Explanations

1) We believe that our economic system should support health, happy citizens. Presently we have a sizeable part of our population who are working poor – who are working for minimum wage. Working 40 hours a week for $10.25 per hour nets $21,320 per year – well below the poverty level (using the LICO) for a single person. The Low Income Cut Off (LICO) is a bit over $28,000 per year. In order to escape poverty, minimum wage needs to be $14 per hour (for a single person).

And having a simple way to adjust the minimum wage on an annual basis is to link it to the Consumer Price Index. This will help ensure low wage workers don’t fall further behind. This will help to ensure a good work-life balance that promotes good health. It also reduces the gap between rich and poor across society which leads to better health outcomes for all our citizens.

2) People with disabilities are some of the most vulnerable folks in our society. Every year another 15,000 Ontario workers join the ranks of people with permanent disabilities due to workplace injury and disease. While many believe our Workers’ Compensation System (WSIB) looks after these injured and disabled workers, the research demonstrates high levels of unemployment, depression and poverty.

One main reason for the failure of our WSIB is the method of setting long term earning losses – a process referred to as “deeming”. This is done by comparing the injured worker’s pre- injury wages and what they are “deemed” to be able to earn after injury.

Approximately 50% of the 15,000 workers are able to return to productive work. The other 50% usually return to work but suffer further injury and disability and end up chronically unemployed. When the WSIB determines these workers loss of earnings, they usually deem them to be making minimum wage – and subtracting that $10.25 per hour off of the disability benefits. And when the minimum wage goes up, those disabled, unemployed worker’s benefits go down.

So, when, or if, the province increases the minimum wage to $14 per hour, thousands of permanently injured workers will see their yearly benefits go down by $7,480 per year.

We recommend that the Minister of Labour and the Government amend the

WSI Act to eliminate deeming (or determining) and phantom wages when figuring out wage loss benefits and use actual wage loss calculations to set wage loss benefits for injured and disabled workers.

To give further context to the situation injured workers face, here is a bit more information.

The Workers Compensation System and the WSIB has been off loading costs from a system funded through workplace employment payroll costs unto individuals and the public purse. We estimate that $1,000,000,000 in direct costs and an equal amount in indirect costs are being transferred from the workplace parties each year. These costs now borne by the public include Social Assistance, CPP-D, ODSP, Health care, loss of income impacting the local economy and deteriorating health status of the disabled workers.

This increases the stress on the provincial budget at a time when the provincial government is predicting major cutbacks in public services. This cost shifting must stop and the Workers Compensation system must return to its founding principles – a pension for as long as the disability lasts.

Disabled and injured workers have been falling behind for the last 17 years – a reduction of 25% in their benefits – but the current administration has decided that’s not enough.

Some facts from the WSIB quarterly and annual reports include:

From 2009 to 2010, the WSIB had increased its denial of new claims from 7.9% to 11.3%;
By September 2011 there was a $631 million reduction in benefits costs compared to 2010;
There has been a 74% reduction in the length of vocational rehabilitation plans compared to the year before;
Average annual benefit paid to a permanently disabled, unemployed worker is reduced to $15,106 a year compared to the average of $21,144 prior to 2010
There has been a 31.3% reduction in permanent impairment awards compared to 2010.

As our oldest social programs in Canada, the WCB/WSIB is a worthy case study for understanding our public services. We believe it is changing from an “historic social compromise” struck back in 1913 to a more private, corporate model. Presently the CEO of the Ontario WSIB is a retired banking executive with no workers compensation experience, making over $400,000 per year plus bonuses with a mandate to “cut costs.”

The result over the last ten years has been a shifting of wealth from disabled workers and their families, many of whom can no longer find work, to the top 1 % – to the tune of $1,000,000,000 per year. Plus, the workplace funded system is transferring additional costs to our public social services and health care system in the hundreds of millions of dollars each year.

The end result for thousands of Ontario families is a story of crisis, despair and destruction, in part brought about by the stigma injured workers face. This stigma can be a daily challenge to the worker’s integrity and self respect that can eventually wear a person down until they want to give up. In fact, our totally volunteer group currently have eight people who are on suicide watch.

In September of 2010, the Minister of Labour and WSIB appointed Professor Harry Arthurs to conduct an independent review of funding of the WSIB and related matters including the issue of benefit indexation for injured workers on partial benefits.

Injured workers on partial benefits have seen the value of the benefits they must rely on eroded by inflation since 1995. Professor Arthurs concluded that fairness “clearly involves restoration of full indexation and abandonment of the present ad hoc system of annual adjustments by regulation.

Professor Arthurs found that steps could be taken to restore full indexation for injured workers on partial benefits and restore some of the erosion of the value of those benefits at the same time as reducing the Unfunded Liability (UFL).

* We recommend that the Ontario Government implement in the upcoming budget Professor Arthurs recommendations:

restore full indexation for injured workers on partial benefits ;
to allow for the restoration the value of the eroded benefits of injured workers; and
to disallow the current practice of ad hoc indexing.

Professor Arthurs also made many recommendations for both the Government and the WSIB to take to ensure that that workers are protected and the experience rating programs are consistent with the requirements of the WSIA. Professor Arthurs wrote on page 81 of his report Funding Fairnes “In my view, the WSIB is confronting something of a moral crisis. It maintains an experience rating system under which some employers have almost certainly been suppressing claims; it has been warned – not only by workers but by consultants and researchers – that abuses are likely occurring. But, despite these warnings, the WSIB has failed to take adequate action to forestall or punish illegal claims suppression practices. …. Unless the WSIB … is able to vouch for the integrity and efficacy of its experience rating programs, it should not continue to operate them.”

To date the Government and the WSIB have failed to implement Professor Arthurs’ recommendations.

* We recommend that both the Government and the WSIB immediately and fully implement Professor Arthurs’ recommendation – section 6.1 of his report.

Many workers and employers remain unprotected by Ontario’s workers’ compensation system. Professor Arthurs described the coverage issue as “so critical for the future of Ontario’s workplace insurance system that it deserves early and extensive study”.

* We recommend that the Ministry of Labour immediately commission a study on coverage with a view towards increasing coverage and addressing potential problems in implementation.

We have heard serious concerns about benefit reductions to vulnerable injured workers under the present WSIB administration.

* We recommend that wage loss benefits be based on actual wage loss and not the “deeming” currently practiced at the WSIB –as was proposed by Minister Peters and passed in the provincial budget in 2007.

About our Organization

Our group, The Thunder Bay & District Injured Workers Support Group, was founded in 1984 in response to the then pending legislation, Bill 101. The geographic area that the Thunder Bay & District Injured Workers’ Support Group membership resides in is approximately one-quarter of a million square miles.

We are a group of workers (and family members) who have been injured or made sick on the job. We have first hand experience of the WCB/WSIB system and know it needs improvement!

The Thunder Bay & District Injured Workers’ Support Group’s (TB&DIWSG) mission is to help create Dignity, Respect and Justice for Injured and Disabled Workers in the Workers’ Compensation System by assisting and educating workers, injured workers, the general public, our elected representatives and WSIB staff.

The organization has four main goals:

Provide information and support to injured workers;
Provide analysis of legislation and make recommendations for improvements and reform;
Educate each other and the general public; and
1. Lobby government and the WCB/WSIB to establish Justice for Injured and Disabled Workers.

The TB&DIWSG is a democratically governed group with a Board of Directors elected at the annual general meeting (AGM). Our members are injured workers, family members and other individuals who support injured workers and their issues.

A recent study (2006) done by Street Health in Toronto on Homelessness found the 57% of the homeless people interviewed were hurt at work.

No one bothers to keep track of our loss and suffering and people believe injured workers get “cash for life”. This may be a common understanding but not reflected in our experience. We did a survey of workers with a permanent disability in Thunder Bay. A few of the findings:

71% are living under the poverty line
42% are receiving welfare (OW or ODSP)
18% are receiving WSIB benefits
15% are working
63% are depressed
15% contemplated suicide

We regularly receive emails such as this:

I have been injured since 1997 with two back surgeries , lower. I am going bankrupt soon. severe depression and stress. All related to my back pain. Injury has moved up to my upper back and neck. I can barely do normal everyday activities. I have been in treatment for self medicating my self. ie alcohol and drugs. i have two children five and 7 months old that suffer for me. me and my wife are at each others throat. I would love to tell my whole story to you. please please contact me i don’t know what to do. cant take the stress no more

History

The Workers’ Compensation System was created in Canada in 1914-15 following an Ontario Royal Commission led by Chief Justice William Meredith. He called it a “Historic Compromise” and laid out the following principles:

Employers: would not get sued leading to social stability that would be the result;
Workers: no fault system=no delays; non-adversarial, no harassment; an impartial, independent public board;
Inquiry system: help the worker, give them the benefit of the doubt;
Employers to pay (as they are protected from lawsuits): the burden was not to fall on the injured worker, their family, or society in general.
Payment was to occur for as long as the disability lasts;
Payment was to be based on the concept of lost wages.

To limit the period during which compensation is to be paid regardless of the duration of the disability . . . is in my opinion, not only inconsistent with the principle upon which a true compensation law is based, but (also) unjust to the injured workman for . . . he will be left without earning power at a time when his need of an income will presumably be greater than (before) he was injured.

Meredith, 1915

. . . it would be the gravest mistake if questions as to the scope of the proposed legislation was to be determined, not by consideration of what is just to the working man, but of what he can be least put off with or if the legislature were to be deterred from passing a law designed to do full justice, owing to groundless fears that disaster to the industries of the province would follow from the enactment of it.

Meredith, Final Report, 1915

3) The public discussion on minimum wage has already produced results. We do our banking at the Bay Credit Union (BCU) here in Thunder Bay. Last month, their Board of Directors passed a motion that the Bay Credit Union will set a rate of $14 per hour for all entry level positions (including students) and will adjust the pay scale for all staff as a result. Even though BCU already pays wages higher than the industry average, they are committed to providing a living wage to all their staff.