The Twist on the Minimum Wage Debate

There is a twist of sorts at the end,
but reading your way might better than just
scrolling down to the end. Just saying.

There is an article in the Edmonton Journal called, Opinion: Don’t Rush to Boost the Minimum Wage (read it). The topic is front and centre in the minds of many because of the NDP’s stated objective to raise the minimum wage from $10.20 to $15.00 by 2018. It’s a big jump and of course has a range of implications.

Just what those implications are is contextual to what lens we are looking through. Small businesses, for example, may have a hard time paying $15.00 per hour, especially when they are small business entrepreneurs are trying to build a business and make their own living from it. As the Journal points out, fast food places worry about the wage hike and how it might affect prices and consequently their businesses.

What about the impact on students trying to find summer work or part-time work during the school year? What about restaurant servers that get a wage plus tips. Should they get the same minimum wage as someone who does not get tips?

One suggestion mentioned in the article has to do with exploring the notion of a gradated minimum wage that increases with a person’s age. For example, the wage might be lower for 16 to 18 year olds but be higher for 22 to 26 year olds. This is done in the Netherlands and might we worth a review by our government.

The Chamber of Commerce, according to the Journal believes that “such a dramatic wage increase is not a one-step solution toward poverty reduction. If combating poverty is the goal, what is needed is a multi-pronged approach involving social programs, housing and taxation levels.” Apparently, as well, chambers around Alberta are pitching to the government that the annual adjustments to the minimum wage should be based on the Consumer Price Index.

Tying the minimum wage to the CPI might be the way to go if – and I stress if – we were starting with an adequate minimum wage.However, the CPI is an aggregate index. There are some cost drivers families experience that are not fully reflected in the CPI or at least are not experienced in an aggregate fashion. The cost of accommodations is one; food is another. For example, between 2000 and 2010 the cost of rental accommodations in Edmonton rose on average 75%. That’s 7.5% per year on average, far higher than any  CPI increase in any of those given years.

The Chamber is correct that the minimum wage, by itself, will not eliminate poverty. It is true we need multi-pronged approaches, but my guess is the expectation of chamber members would be that this “multi-pronged” approach would somehow keep the minimum wage lower than planned by the government.

Yes, social programs are needed to address poverty, but not just to ameliorate its effects on people. More affordable housing and special purpose housing for those with mental illness, disabilities, large families, and the addicted are needed, too. And yes as well to taxation levels, though my recollection is that most businesses don’t want to pay higher taxes. That said, higher taxes don’t necessarily translate into living wages or a better minimum wage. We do know that keeping corporate and personal taxes low hasn’t fueled the economy sufficiently enough to help end poverty either.

In other words, what is good for business is not automatically good for the poor and the thousands of workers earning insufficient income at jobs that offer zero benefits and little job security.

The one perspective missing from the Journal article is that of one earning the minimum wage. For those receiving the increase, it could mean no longer having to depend on the food bank, no longer choosing between utility bills and medicine for a sick child, no longer sending one’s children hungry to school. How many would no longer require welfare payments?

One of the fundamental questions, which I agree requires a multi-pronged approach to address, is how can we build and sustain an economy that works for the majority? With so many people living in poverty and as many more living pay cheque to pay cheque; with so many living without health and dental benefits, much less any kind of retirement benefit; with so many young workers forced to share living accommodations and the insecurity of such an arrangement; and with so many who call the street their home, who really believes our current economy is working for most of us?

I don’t know how the NDP settled on $15.00 per hour as their goal. It’s below what many think is a living wage — approximately $16.00 to $17.00 per hour. Nevertheless, it is a radical move. I trust our new leader does not see this as a facile undertaking, and my guess is the NDP does have a multi-pronged approach to ending poverty. And perhaps it has a few ideas on how to change our economy and how to address the growing problem of income inequality.

What I do appreciate about the announcement the government made about its plan was that it announced it right away. That’s a strong, bold statement because it suggests, at least to me, that for the first time in a long time, if ever, the minimum wage question has become bigger than how it affects business and profits. I do not recall a Chamber of Commerce ever itemizing the negative impacts of the current minimum wage on people and their families. If I am wrong, please correct me.

The plan is a people-focused plan or perhaps a better way of saying it is “people first.” Of course I do realize that businesses of all sizes add value to that principle.

But here’s the twist for you.

Instead of promoting an economy that is based on the premise that what is good for business is good for people, perhaps we should promote an economy based on the premise that it should be good for all people which should then drive social and economic policy and decisions.

That’s not only a sift in emphasis; it is a shifting of power.

And there’s the rub.

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