Minimum wage hike won’t make lives better
That Jobs Minister Shirley Bond’s department is discussing an increase in the minimum wage with business groups and others comes as no surprise. The Liberal government has made clear that it plans slow, predictable increases in the minimum wage in line with economic growth, productivity gains and increases in the Consumer Price Index.
Other provinces have already moved minimum wage rates higher leaving B.C. at the bottom of the pack at $10.45 an hour. Ontario’s minimum wage now stands at $11.25, although there are lower rates for students under 18 and liquor servers. Alberta’s is $11.20, Manitoba and Nunavut are at $11, Quebec moves to $10.75 in May, and the rest range from $10.50 in Newfoundland to $12.50 in the Northwest Territories.
As The Sun’s Rob Shaw reported Friday, in order to keep up with other provinces, B.C. will have to move to at least $10.75, a rate business should be able to absorb without too much disruption. It will automatically rise by 10 cents in September in any event to account for inflation.
The B.C. Federation of Labour and antipoverty groups have campaigned on raising the minimum wage to $15 an hour, arguing that rates lower than that leave workers below the Statistics Canada low-income cut-off. But there is compelling evidence that raising the rate too much, too fast would do more harm than good. For instance, business could choose to hire fewer workers, reduce benefits, cut back hours, trim training budgets or find other ways to compensate for the rapid increase in labour costs. If low-skill minimum wage earners received such an increase (a wage hike to $15 from $10.45 is 43.5 per cent) — workers higher up the income ladder would surely demand something similar, leading to cost-push inflation. In other words, the increase in wages would lead to increases in the price of goods and services, leaving workers (a.k.a. consumers) no better off.
Those most likely to suffer the negative impact of a sudden jump in the minimum wage are youths between the ages of 15 and 24, who make up more than half of minimum age workers in B.C.
Moreover, a leap of that magnitude in the minimum wage would do nothing to help the truly poor. The reason for this is that studies show the majority of minimum wage earners do not come from poor households. Those in absolute poverty, rather than simply being relatively less well off than average, earn no income from employment at all. These are the people who most need our help.
The B.C. government is taking the right approach to raising the minimum wage incrementally as economic conditions allow. We should not conflate minimum wages with helping the poor. That being said, government should be working on an effective anti-poverty strategy unrelated to the minimum wage.