Minimum wage recently took another jump. Some are bleating that this will kill our economy. Others are bleating that if we don’t increase minimum wage, current minimum wage earners will make less than the cost of impoverished living.
Way to go, divisive politics, you’ve done away with common sense once again.
Minimum wage does not have to jump up 50% in 3 years. However it isn’t unreasonable to want employers to pay a reasonable amount so that their employees can enjoy a basic standard of living. But that isn’t a minimum wage you are arguing for, that’s a living wage.
The key difference is that a minimum wage is a mandated amount for all workers in a jurisdiction. A living wage will differ from one region to another. As an example, Calgary’s living wage is $18.15/hour, Medicine Hat’s living wage is $13.00/hour. So a minimum wage of $15.00/hour (which is Alberta's target in October 2018) is far more than a living wage in the deep south of Alberta, but not high enough to be a living wage in our big cities.
Minimum wage is a blunt instrument used for the wrong purpose. It can’t be treated as the only means to achieve a living wage. Instead, as has been done successfully in B.C. and Ontario, we must work to make living wage be a decision made by employers, responsive to the local cost of living, interested in creating peace of mind for their employees, and therefore having far more productive employees. Minimum wage is not that tool, but it can help start that conversation.
But in Alberta, the NDP has chosen this blunt instrument to get to the living wage, and the very real risk is a loss of jobs. Rachel Notley is even aware of this, with easy access to a 2010 study in Québec about what the minimum wage increase will mean for jobs. That study recommends a minimum wage that is 42% of the average wage will cause the best reduction in income inequality while causing the least impact on the jobs market. Even so, Notley says she doesn’t expect any jobs to be lost due to minimum wage.
She is relying on a turn of phrase, and an uninformed voter to be able to make that statement with confidence.
What Notley means to say is that we should not expect any jobs to be lost due to the minimum wage alone. Add in the carbon tax, beer tax, and a dismal showing of support for our economy, and absolutely jobs will be lost.
She’s also relying on the fact that 42% of the average wage in Alberta ($29.54/hour - incidentally I started writing this blog a week ago, when the average wage was over a quarter lower at $29.21) is a a couple of dimes more than the newly-raised minimum wage. According to that Quebec study, that means job losses shouldn’t be noticeable. Notley knows this, and so has had a free pass to blame job losses on other factors, like the economy or the federal Liberals who don’t approve pipelines quickly enough.
However, when that increase comes again next year, it will increase the ratio to 45% of the average wage, and in 2018 it increases again up to 50%. If the Quebec study is any predictor, that will translate to a loss of approximately 24,000 jobs in 2017, and a further 40,000 jobs after that.
And those are just the jobs that actually get reported.
What about the jobs that just simply disappear? Mom and Pop shops can see these wage increases coming, and when someone vacates a job for any reason, they are likely to seriously consider whether or not they want to fill that empty position. A position that goes empty and just never gets filled is not a laid-off position, but make no mistake, it is most certainly a job lost.
These kinds of job losses are already happening. One business in High River I am aware of has simply chosen not to fill 50 hours/week left open by vacating staff members. But because nobody reports these as positions that are cut, Notley’s NDP will never notice them.
And darn those evil Mom and Pop shops for not being willing to pay their employees a living wage! Those people have no care and consideration!
Please, please, please, please, please don’t forget that Mom and Pop are Albertans too.
Consider small town Alberta, where many small business owners exist. These small business owners don’t have a large operation that have more latitude to absorb this increase in the cost of labour. They likely also don’t have a large clientele that they can distribute this extra cost across. No indeed, they will be forced to either raise their prices quite noticeably, or simply get rid of those jobs/let those jobs disappear. If they don’t, how can these small business owners make their own living wage?
Raising prices puts them at a real risk of losing their clientele to Amazon or to the big cities. And having worked with many of these small businesses, not a single one of them wants to lose an employee, much less take on the extra workload without that employee. But they will make that decision, and as they don’t have a demographic of 1,000,000 people to serve, they lose their viability. It’s not a poor business model, it’s the reality of the labour of love that is running a small business in small towns.
This is no small issue for small business in small towns. And when a small town’s economy takes a hit like this, the whole town does.
What’s the solution? Change course. According to the study suggesting what the perfect balance is, we’re already there. Continue with that study’s recommendation to index the minimum wage to the average wage. If every year we index the minimum wage to 42% of the average wage, we can always expect a properly proportional increase that manages income inequality while not cause a major expense in the jobs market.
If you really want, make like a Canadian and round it to the nearest nickel.
But the current course is on a sure path to attack our economy. Our small towns can’t take any more.