Rai­sing mi­ni­mum wa­ges: good in­ten­tions, bad po­licy …

La Jornada (Canada) - - PORTADA -

As the old sa­ying goes, the road to hell is pa­ved with good in­ten­tions. But good in­ten­tions alo­ne aren’t enough to jus­tify go­vern­ment po­licy. Real­world evi­den­ce mat­ters.

B.C. Pre­mier John Hor­gan no­net­he­less re­cently an­noun­ced plans to rai­se the pro­vin­ce’s mi­ni­mum wa­ge by 34 per cent over four years, from its cu­rrent hourly ra­te of $11.35 to $15.20 by 2021. Hor­gan ma­de clear his good in­ten­tions when he spo­ke of lif­ting “peo­ple out of po­verty.”

Char­les Lam­mam

Click ima­ge to down­load

We cer­tainly ap­plaud this sen­ti­ment and sha­re the pre­mier’s goal. Un­for­tu­na­tely, the evi­den­ce shows that rai­sing the mi­ni­mum wa­ge is a fla­wed stra­tegy for achie­ving this cri­ti­cally im­por­tant so­cial ob­jec­ti­ve.

For star­ters, the mi­ni­mum wa­ge does a poor job of tar­ge­ting the peo­ple we want to help: the wor­king poor. Ac­cor­ding to da­ta from Sta­tis­tics Ca­na­da, the vast ma­jo­rity of B.C.’s mi­ni­mum wa­ge ear­ners don’t li­ve in po­verty. In fact, 89 per cent are not part of a low-in­co­me hou­sehold.

Whi­le this may sound coun­te­ri­n­tui­ti­ve, it ma­kes sen­se on­ce you reali­ze that the overw­hel­ming ma­jo­rity of mi­ni­mum wa­ge ear­ners aren’t the pri­mary or so­le ear­ner in their hou­seholds. They are mostly tee­na­gers or young adults wor­king their first jobs or wor­king part-ti­me whi­le in school. In B.C., 54 per cent of mi­ni­mum wa­ge ear­ners are un­der the age of 25, with the vast ma­jo­rity li­ving at ho­me with pa­rents or ot­her re­la­ti­ves.

Anot­her 19 per cent of all mi­ni­mum-wa­ge ear­ners li­ve with an em­plo­yed spou­se who of­ten earns mo­re than the mi­ni­mum wa­ge. So even ol­der mi­ni­mum wa­ge ear­ners tend not to be the so­le bread­win­ners in hou­seholds.

Thank­fully, a sin­gle pa­rent strug­gling to get by on mi­ni­mum wa­ge is pretty ra­re - only 2.1 per cent of mi­ni­mum wa­ge ear­ners are sin­gle pa­rents.

The fact that the mi­ni­mum wa­ge inef­fec­ti­vely tar­gets the wor­king poor helps to ex­plain why Ca­na­dian re­search finds that past hi­kes ha­ve fai­led to re­du­ce po­verty. To the ex­tent that so­me peo­ple do gain, 70 per cent of the in­co­me gains go to non-poor hou­seholds.

In fact, one study found that rai­sing the mi­ni­mum wa­ge can in­crea­se po­verty be­cau­se job los­ses as­so­cia­ted with a hig­her mi­ni­mum wa­ge are dis­pro­por­tio­na­tely felt by poor. Spe­ci­fi­cally, 47 per cent of job los­ses are by the poor or near-poor (tho­se with in­co­mes l than 50 per cent abo­ve the low-in­co­me th­res­ho

Hugh Ma­cInty­re

Click ima­ge to down­load

But the pro­blem is not just that the mi­nim wa­ge inef­fec­ti­vely tar­gets the wor­king poor. It a ma­kes it har­der for less-ski­lled wor­kers in our ciety to find work.

When em­plo­yers are for­ced to pay hig wa­ges to young wor­kers with little work ex­pe en­ce and skills, they tend to cut back on the nu ber of peo­ple they em­ploy, work hours, and ot forms of com­pen­sa­tion such as job trai­ning an or frin­ge be­ne­fits.

In so­me ca­ses, they pass along the hig la­bour costs of the mi­ni­mum wa­ge to their c to­mers in the form of hig­her pri­ces, which, p ver­sely, has a dis­pro­por­tio­na­te im­pact on the po

For­tu­na­tely, the­re are bet­ter po­licy op­tio avai­la­ble to help the wor­king poor with few

the felt less old). um al­so so-

gher eriumt­her nd/

gher cus­pe­roor. ons wer ne­ga­ti­ve con­se­quen­ces.

The go­vern­ment could help the wor­king poor by top­ping up their wa­ges.

The Wor­king In­co­me Tax Be­ne­fit ( WITB), a fe­de­ral pro­gram, re­pre­sents one im­por­tant exam­ple. First im­ple­men­ted in 2007, the WITB pro­vi­des a cash sub­sidy to low-in­co­me wor­kers. At a cer­tain point, the WITB be­gins to pha­se out with ad­di­tio­nal in­co­me, but only gra­dually.

The WITB mo­re ef­fi­ciently in­crea­ses the in­co­me of the wor­king poor wit­hout ma­king it har­der for em­plo­yers to hi­re less-ski­lled wor­kers.

When it co­mes to hel­ping the wor­king poor, good in­ten­tions aren’t good enough. Evi­den­ce should gui­de po­licy. Rai­sing the mi­ni­mum wa­ge doesn’t pro­vi­de the desired re­sults. -TROYMEDIA

Newspapers in Spanish

Newspapers from Canada

© PressReader. All rights reserved.