Wednesday, June 1, 2011

Minimum wage to go up?

The Caledon Institute for Social Policy released a paper addressing minimum wage in April. This report contains some interesting statistics about minimum wages (in constant dollars) over time as well as considering it as a percentage of average wages.

Alberta continues to have the second lowest minimum wage in Canada. As of November, it will have the lowest wage. And Alberta’s minimum wage is also the second lowest in terms of its percentage of an average wage. When compared to both US and Canadian jurisdictions, Alberta’s minimum wage of the 4th lowest.

The report also provides an interesting analysis of the potential effect over time of indexing the minimum wage to either inflation or average wages. The most salient comment in this analysis is that no method of indexing is effective if the basic minimum wage rate is inadequate to allow workers to live on.

Alberta was set to raise the wage (in accordance with an indexing formula) in 2010 when the Minister put the brakes on. A subsequent review recommended a 25-cent increase last fall. To date, there have been no action on this advice and low-wage workers (mostly women and mostly poorly educated) are still being paid the same minimum wage they received in 2009.

It is expected that later today the Minister will announce an increase in the minimum wage from $8.80 to $9 an hour (effective some time in the fall). While this is good news for minimum wage earners, there are some questions we should ask.

The first question is why the delay? An 18-month delay in an increase means low-wage workers subsidize employers through static wages. One answer might be that the government, facing flagging polling numbers, did not want to annoy business further. If so, it did that on the backs of low-wage workers.

The second question is why only a 20-cent increase? A legislative committee recommended a 25-cent increase last year. That maintained wage parity to April 2010. Only going to 20 cents means the buying power of low-wage workers falls behind. Further, there does not seem to be any accounting for the effect of inflation from April 2010 to May 2011. So low-wage workers fall further behind.

My guess is that the Minister is going to announce he is running for the leadership of the conservative party. A small increase in the minimum wage gives him a response to critics who might say that he treated low-wage workers poorly during his time as Minister. Yet, it is such a small increase and it has been put off so long he will not face major blowback from employers.

There is a political shrewdness to that strategy that you have to admire. Until you realize that it means low-wage workers (often women) are being used as political pawns. Then it becomes kind of disgusting.

-- Bob Barnetson

1 comment:

Bob Barnetson said...

The government's announcement is here:

The increase is $9.40 an hour, which is a significant and laudable bump up although Alberta is still the third-lowest minimum wage jurisdiction. We will return to the second-lowest wage on November 1 when BC's announced increase comes into place.

The downside is that those who serve alcohol a required to receive only $9.05 an hour. This appears to be a sop to the restaurant and food services industry.