Minimum wage now country’s highest
Employers suggest lower rate needed for inexperienced youth
When the Alberta government announced in June 2016 its intention to move toward a $15 an hour minimum wage, it issued a news release containing quotes from James Boettcher.
Boettcher, the CEO of Calgary’s Fiasco Gelato, was held up by the government as an example of a business owner in favour of a “fair living wage” — someone who believed it is possible to pay employees enough to get by on, while still operating a successful business.
Two years later, Boettcher still believes in paying his employees fairly. Fiasco Gelato is a certified “B Corporation,” meaning it meets defined standards of social and environmental performance, and Boettcher speaks regularly about his belief that employers are inherently responsible for their employees’ well-being.
However, he’s no poster boy for the Notley government’s minimum wage policy. In fact, even at the time his name was being printed on that news release, Boettcher had serious concerns about the NDP’s $15 an hour plan, which comes into force today. Those concerns have only deepened in recent months, to the point that Boettcher is now calling on the government to admit its minimum wage policy is “broken.”
“I think the government is trying to do the right thing, but they’ve missed the mark,” he said. “I’d like to see them admit they’ve made a mistake.”
Boettcher, whose company has been ranked among Canada’s fastest-growing companies for the past several years, doesn’t have a problem with a $15 minimumwage for adults who need to support themselves.
In fact, he would like to see that minimum raised closer to $18, which is considered a “living wage” and is about where he starts his own adult employees.
What he can’t understand is why he must pay his teen employees — most of whom have no previous work experience and still live with their parents — the same rate. Hesaid he believes employers who are forced to pay $15 an hour to “kids” will simply choose not to hire them, robbing young people of precious work experience in the process.
“It’s going to be very hard for an employer, even one like me who wants to provide opportunity to young people,” he said.
“You get a stat holiday and all of a sudden you’re paying a kid — who’s living at home and is just saving money for a new bicycle or a family trip to Hawaii — $23, $24 an hour.”
The idea of a “youth differential,” or a lower wage rate for teen workers, is one often raised by employers. Many of them say it would make Alberta’s minimum wage — which has gone up 47 per cent in three years and today becomes the highest in Canada — more palatable.
Youth differentials were once a common component of minimumwage rates in Canada. Alberta had a lower rate for workers under 18 until 1998, when it was repealed. Currently, the only province with a separate wage rate for youth is Ontario, where students under the age of 18 can be paid $13.15 an hour instead of the adult rate of $14 an hour.
Alberta Labour Minister Christina Gray said the government opted not to include a youth rate as part of its minimum-wage policy, because it believes that all workers work hard for their money.
“All workers deserve a fair wage for the work that they do, whether someone is 18 or 81,” she said.
Gray added it’s a common misconception that the typical minimum-wage worker is a teenager living in the family home, when in fact in Alberta, 75 per cent are at least 20 years old. One-third of them have families and more than 60 per cent are women.
“I also think it would be a mistake to assume that youth don’t have important financial responsibilities they need to take care of,” Gray said, adding that could mean putting themselves through university but could also mean they are supporting other family members or children of their own.
In a report released Thursday, the Fraser Institute argues that raising the minimum wage can produce unintended economic consequences for young and inexperienced workers, including fewer job opportunities, reduced hours available for work, and a shift toward automation. The study points out that for many young people, a minimum-wage job is a stepping stone — and that in fact, most minimum-wage earn- ers soon move on to higher-paid employment.
Steve Lafleur, senior policy analyst with the Fraser Institute, said anything that makes it harder for young people to get those stepping stone jobs should be a concern, because young people in Alberta are still struggling with unemployment. In August, the youth jobless rate was 11.8 per cent — down from a high of 15 per cent at the height of the recession in 2016, but still significantly higher than any other age category.
“The statistics show that young men in particular have really not done so well” in the recession, Lafleur said. “And certainly if the starting wage is higher, it’s harder to employ people. When you’ve got a big glut of young people who are unemployed, that’s particularly challenging.”
Trevor Tombe, an associate professor of economics at the University of Calgary, said it’s true that Alberta’s youth employment levels are not recovering at the same pace as those in other age categories.
Tombe — who has compared a number of academic studies from both Canada and the U.S. on the employment impacts of minimum wage increases — said the research is mixed. Many studies have found a small negative impact on employment rates among young workers, particularly teenagers. Other studies have found zero impact.
“A fair representation of the literature says a 10-per-cent increase in the minimum wage can reduce employment among teenagers anywhere between zero and three to four per cent,” Tombe said. “So, there’s not some magic number. We don’t know for sure, certainly not with any precision what it might look like in Alberta.”
Even if the overall effects on employment are minimal, a minimum-wage hike is still a “very broad” public policy tool, Tombe said. If the goal is to reduce poverty, a wage subsidy targeted specifically to low-income individuals and families might be a better way to go, Tombe said. Examples of existing wage subsidies include the Alberta Child Benefit and the federal Working Income Tax Benefit.
“There may be more targeted ways of doing it (getting workers to $15 an hour) that are already on the books,” Tombe said. “It would be less distortionary, it wouldn’t have adverse employment effects. But there’s always a trade-off; it would come at the expense of the government’s bottom line.”
For his part, Boettcher said he got his first job bagging groceries at age 14, and credits that experience with teaching him basic life skills like punctuality, talking to adults and being respectful. He said he worries that as minimum wage continues to climb, more teens will be kept out of the job market and miss out on learning those vital skills.
“If kids don’t have job opportunities until they’ve graduated with a post-secondary degree? Godhelp us,” Boettcher said. “These are skills that if they are overlooked, they’re going to be really hard to learn in your 20s.”
All workers deserve a fair wage for the work that they do, whether someone is 18 or 81.