Minimum Wage in Alberta

In March, Alberta announced it would freeze an expected 12-cent-per-hour increase in its (present) $8.80 per hour minimum wage. “This decision reflects what government feels will both protect jobs during these uncertain economic times and support the economy,” said Thomas Lukaszuk, Minister of Employment and Immigration.

In effect, the government asserted that increasing minimum wage costs by 1.4% for the 1.5% of the workforce earning the minimum wage would somehow result in job losses or impede the economic recovery.

There is quite a lot of debate regarding the impact of increasing the minimum wage on job number. On the one hand, the Fraser Institute argues the case is clear: increasing the minimum wage reduces employment. Of course, increasing the minimum wage also reduces the profitability of businesses (slightly), which runs contrary to the interests of the Fraser Institute’s funders.

On the other hand, the Canadian Centre for Policy Alternatives argues there is little evidence of rising minimum wages having any impact on employment numbers. Further, neither the Organization for Economic Co-operation and Development nor the International Labour Organization believe that increasing the minimum wage is a significant cause of job loss.

This technical discussion is interesting but it distracts us from the real policy issue: the purpose of the minimum wage (and, more broadly, the floor of rights) is to ensure workers are not employed at an unacceptable wage.

This suggests Lukaszuk needs to ask himself if subsidizing marginal businesses -- businesses that would presumably go under if wages went up some $240 per year -- on the backs of the lowest-wage earners is consistent with the public policy objective of a minimum wage.

It seems to me that holding the minimum wage steady simply ensures the 1.5 per cent of Albertans who earn the minimum wage will be less able to afford the necessities of life. These minimum wage earners -- the working poor -- are mostly women and have little education. Working full time, they can expect to earn a before-tax annual income of $17,600 for full-time work -- $3,500 less than the 2006 low-income cut-off (i. e., the poverty line) of $21,202.

-- Bob Barnetson