Indexing an $11/hour minimum wage is a terrible idea

The provincial government’s plan, to raise the minimum wage to $11 an hour in October and index it to inflation annually, is a terrible idea.

This statement may seem odd coming from the Newfoundland and Labrador Federation of Labour (NLFL). Labour organizations, and their social justice partners, have been working hard for minimum wage increases for decades.

The problem is the planned increase to $11 — sets the minimum wage at an unacceptably low level — among the lowest in Canada. Only Saskatchewan and Nova Scotia, representing 6% of the population of Canada, will have a lower minimum wage.

Linking future minimum wage adjustments to inflation, would lock it in at that low level, which means that the minimum wage would not increase faster than costs. People on a minimum wage would not catch up, but would stay in poverty indefinitely. This hurts them, and our economy.

What we need is a substantial increase to the minimum wage.

In Newfoundland and Labrador, over 12,000 workers are paid a poverty wage. Contrary to business lobbyists’ claims, the majority of minimum wage earners are not teenagers or high-school dropouts; more than half are 25 or older, and 3 in 4 have completed high school or post-secondary.

Particularly troubling, women in the workplace are 40 per cent more likely than men to be minimum wage earners.

Other provinces are showing real leadership on minimum wage. The majority of Canadians are heading toward a $15 minimum wage. With the governments of Alberta, Ontario, and BC already having made their announcements, that means two-thirds of the population of Canada will have a $15 minimum wage.

Like many others, we support an increase to a $15 minimum wage for N.L.

However, is $15/hour a living wage? The low income line for 4-person families in N.L., is around $40,000/ year, which translates roughly to a $20/ hour wage.

According to the “Living Wages for Families” campaign, a living wage is the hourly amount a family of four needs to cover the basics — food, clothing, rental housing, child care, transportation, and a small amount of savings to cover illness or emergencies.

While we support a $15 minimum wage, it is clear that we also need to start a conversation about how and when we can get to a real living wage.

How long is it acceptable to delay, and how many thousands of families will have to survive on, a less-than-living wage in the meantime? What impact does that have on our economy?

In addition to increasing the minimum wage, we can move the poverty line by reducing the cost of living for lower income households. This will help shorten the path to a living wage. The Canada Child Benefit helped lower the cost of living across Canada, reducing the amount of income needed to cover the basics.

Our government can help reduce the cost of living for lower income people; by eliminating regressive user fees, boosting the Income Supplement, making the income tax system more progressive, providing universal free childcare, and legislating pay equity among other things.

Government should boost the minimum wage this fall, but beyond $11. It can increase the minimum wage annually, to reach a target of $15 over the next few years. At the same time, reduce the cost of living for lower income people. Government needs to chart a more ambitious course towards a living wage level.

$15 is the beginning of a conversation about a fair minimum wage. The end will be reached when we have a living wage.

Linking future minimum wage adjustments to inflation, would lock it in at that low level, which means that the minimum wage would not increase faster than costs.

Mary Shortall President, new foundland and Labrador Federation of Labour