THE ECONOMIST IN THE MIDDLE OF THE MINIMUM WAGE FIGHT
Chair of panel says he’s keeping open mind, but opponents counter committee’s ‘rigged’
The $15-an-hour minimum wage issue in Alberta has become a political football and Joseph Marchand knows he’s smack in the middle of a full-contact game.
But the University of Alberta economist, named chair of the UCP government’s minimum wage panel last week, insists the results are not predetermined and he’s keeping an open mind to wherever the data takes him.
Marchand has already learned just how divisive the debate will be. The committee has faced accusations it’s rigged against the higher rate, and that it will eventually favour Alberta moving back to a system with a lower wage for liquor servers.
After the Edmonton-based labour economist put out a report in 2017 for the C.D. Howe Institute, indicating a $15-an-hour minimum wage in Alberta could lead to roughly 25,000 lost jobs, he found out this wasn’t just an academic exercise as criticism came his way.
“I was a novice to Canadian politics specifically, but also to politics in general, because I am coming from policy, not politics,” the New Jersey-raised economist said in an interview.
“Frankly, I was a bit surprised by how political this was … I am not bringing any politics to this.”
Marchand might not be, but those on both sides of the debate certainly are.
The NDP and groups that support the previous government’s policy have blasted the panel’s composition, noting it includes officials from two industry groups — Restaurants Canada and the Canadian Federation of Independent Business — that both opposed the $15 wage.
Critics also question the narrow representation on the committee.
“I’m concerned that this has been created to tell the UCP what they want to hear,” said NDP MLA Christina Gray, who as the former labour minister increased the rate to $15.
“I don’t know why voices from non-profits, from post-secondary students, voices from organized labour ... don’t have a place on this panel.”
The president of the Alberta Federation of Labour said it’s clear where the U of A professor stands, given his previous critique of the NDP’S policy.
“The panel is stacked, it’s rigged,” said Gil Mcgowan.
“Look at the chair, who is supposed to provide some balance … he clearly put himself in the alarmist camp.”
Alberta’s minimum wage has been a contentious issue dating back to the former PC government, and in 2014 the province was tied for having the lowest one in Canada at $10.20 an hour.
During the provincial election in 2015, the NDP promised to boost it to $15 and did so while in government, reaching the mark last October.
California and New York, as well as British Columbia, have also pledged to move to such a level, although Alberta is the only one to get there yet.
Groups representing industry note the change amounted to a 47 per cent jump in just four years.
“It was certainly too much, too fast and at the wrong time,” said panel member Mark von Schellwitz of Restaurants Canada.
The committee is expected to study and publish information related to the hike, and examine if a lower wage for liquor servers “could lead to higher net incomes.”
Mcgowan counters industry groups just want to keep wages low and he believes the evidence shows a higher minimum wage is good for workers, the economy and, in most cases, for businesses.
A provincial report last year found 6.4 per cent of Albertans earned minimum wage between April 2017 and March 2018.
Of that group, more than 62 per cent were female, and almost six in 10 worked in either the food services industry or the retail trade and accommodation sectors.
At that time, almost half of those making minimum wage were under 25 years old.
Marchand’s report in 2017 grabbed attention with its job loss calculation, although that was only a small part of it.
It noted a proper study of the employment impact could only take place after the wage target was fully implemented, although it pointed out that rough calculations indicated a “potential loss of roughly 25,000 jobs.”
Marchand notes between May 2015 and last month, the province saw total employment climb by 38,000 people. However, for Albertans aged 15-to-24-years old — the group most likely to earn minimum wage — it fell by 41,600.
In Saskatchewan, where the minimum wage didn’t rise as quickly as Alberta’s rate, youth employment also fell during that period, suggesting the broader economic downturn played a part.
However, Alberta’s employment rate for this group of younger workers was 1.1-percentage-points higher than in Saskatchewan in May 2015, and it’s now 0.3-percentage-points lower than our eastern neighbours, he added.
“Is that in itself the policy difference? Again, it’s too hard to tell. This is just the starting point” for more study, he said.
Marchand, who has a degree from Syracuse University, points out it’s difficult to untangle the recession from the higher minimum wage when it comes to the impact on employment, but that will be the job in the weeks ahead.
University of Calgary economist Trevor Tombe agrees it’s tricky, with multiple factors happening simultaneously, to get to the bottom of what impact the wage increase had on the province.
“I don’t envy his task … to layer on some good analysis and cut through the politics will be tricky, but very valuable,” he said.
Marchand said curiosity is what first compelled him to study the issue, as Alberta is the first province or state in North America to reach the $15-an-hour wage.
“Not only is it important for us to figure out what the effects were on Alberta, it’s important to others that are also on this path to $15 to know what happened here. So I think we do have a duty to explore these things and figure out exactly what happened,” he said.
“My prediction is that it’s going to be a mixed bag across all these outcomes. Then it would be up to policy-makers to say, ‘Was that worth it?’ ”