Alberta needs a $15 minimum wage — now
Any Albertan earning less is living below the poverty line
The world as we know it is about to end: At least, that’s what you’d think if you listened to right-wing commentators bending themselves out of shape over the prospect of a $15-an-hour minimum wage.
Here are five reasons Premier Rachel Notley should ignore the whining and get on with the job of giving Alberta’s lowest-paid workers a raise.
1. HIGHER MINIMUM WAGES DON’T KILL JOBS
Experts have been studying the effects of minimum wages increases for more than 30 years.
What the evidence shows is that the huge job losses predicted by the hypothetical economic models used by business groups have never materialized.
Whether we’re talking about Canadian provinces like Ontario, Quebec and B.C. or American cities like Seattle, San Francisco and Santa Fe, absolutely none of the dire predictions has come true.
2 . HIGHER MINIMUM WAGES ACTUALLY HELP THE ECONOMY
There are two reasons the sky doesn’t fall when big increases are made to the minimum wage.
First, higher wages can actually help control business costs by reducing employee turnover which, in turn, increases productivity. This could be called the “Costco Effect,” after the company that learned it can profit in the cutthroat retail sector by paying its employees more.
Second, higher wages put more money in the pockets of low-wage workers who, in turn, spend that in the local economy. This could be called the “Henry Ford Effect,” after the famous U.S. industrialist who paid his employees well so they could afford to buy his cars.
3 . HIGHER MINIMUM WAGE S DON’T HURT PROFITS
The reason some economic models predict massive job losses resulting from minimum wage increases is because those models assume businesses will do nothing to deal with the changed environment — which, of course, is ridiculous.
What happens in the real world is that increased costs are simply passed along to customers in the form of slightly higher prices.
So, a higher minimum wage is much more likely to result in a cup of coffee that costs 15 cents more than it is to result in layoffs.
The beauty of an acrossthe-board increase is that it levels the playing field. Employers who have always wanted to pay their workers fairly will no longer have to worry about being undercut by unscrupulous competitors who pay poverty wages.
4 . THE PROPOSED INCREASE IS NOT REALLY THAT BIG
Low-wage defenders claim the Alberta plan represents an “unprecedented” jump in the minimum wage of nearly 50 per cent, but this is wrong.
Ontario raised its minimum wage by 65 per cent over a shorter period in the 1970s, and the sky didn’t fall. More recently, the same is true for a number of U.S. cities.
Just as importantly, the effective increase faced by most low-wage employers is much smaller than 50 per cent because so few of them pay the current minimum of $10.20.
In fact, nearly 75 per cent of Alberta’s 300,000 low-wage workers cluster between $12 and $15 an hour. For an employer currently paying at the lowest end of this range, a new minimum of $15 would represent a 25-per-cent increase, not a 50-per-cent increase.
To put it another way, the government could immediately increase the minimum wage to $12 and only a tiny number of workers would be affected (about three per cent of Alberta’s labour force of 2.3 million).
5 . ANYTHING LESS THAN $15 PER HOUR IS A POVERTY WAGE
We should have a minimum that allows a person working full time, full year, to live above the poverty line. Alberta’s current minimum wage doesn’t even come close to that threshold.
According to Statistics Canada, people living in any of Alberta’s major cities would have to earn at least $14.50 per hour — right now, not three years from now — to keep themselves out of poverty.
Rather than giving in to pressure from low-wage employers, Notley should stick to her guns and remain true to the values that got her elected May 5.
She should listen to policy experts, who suggest that the minimum wage should be set at around 50 per cent of the median wage (in Alberta, that would me an a minimum wage of — wait for it — $15).
She should also listen to people like Seattle-based venture capitalist Nick Hanauer, who recently called lowwage employers “parasites on the larger economy” because their practices undermine the ability of their employees to participate fully in the economy as consumers.
It’s also time to act on evidence from groups such as the International Monetary Fund showing that low wages actually suppress economic growth.
We shouldn’t be afraid of a $15 minimum wage. In fact, it should be introduced now, not three years from now.