Predictably, low-wage employers are trying to discourage the Alberta government from keeping their promise to increase the minimum wage to $15 by 2018.
And they’ve latched onto the recession as an excuse to do nothing. “Now is not the right time,” they say.
But the truth is that now is never the right time for low-wage employers! Their arguments are self-serving and based on myths, misconceptions and, in some cases, outright lies.
Here’s a list of the top 10 reasons why a $15 minimum is still the way to go … and why the government should ignore the crocodile tears coming from low-wage employers and their lobbyists.
1. Higher minimum wages don’t kill jobs
Experts have been studying the effects of minimum wages increases for decades.
What the evidence shows is that the huge job losses predicted by the hypothetical economic models used by business groups have never materialized in the real world.
Whether we’re talking about Canadian provinces like Ontario, Quebec and B.C. or American cities like Seattle, San Francisco and Santa Fe, absolutely none of the dire predictions made by employers and their lobbyists have come true.
In fact, employment in traditionally low-wage sectors like restaurants, retail and hospitality has gone up in places like Seattle after they increased their minimum wage to $15.
2. Higher minimum wages actually help businesses
Higher minimum wages can actually benefit businesses by helping them control costs. Specifically, higher wages can control costs by reducing employee turnover which, in turn, increases productivity.
This could be called the “Costco Effect” after the company that discovered it can boost profits in the cut-throat retail sector by paying its employees more.
3. Higher minimum wages give a boost to the economy
Higher minimum wages also help boost the overall economy by putting more money in the pockets of low-wage workers who, in turn, spend that money in the local economy.
This could be called the “Henry Ford Effect,” after the famous American industrialist who said it made sense to pay his employees well so they could afford to buy his cars.
Low-wage employers should remember this lesson: by paying their employees more, they’re helping to create consumers with increased purchasing power!
4. Employer warnings about job loss are based on faulty models
The reason some economic models predict massive job losses resulting from minimum wage increases is because these models assume businesses will do nothing to deal with the changed environment – which, of course, is ridiculous.
What happens in the real world is that the increased costs associated with a higher minimum wage are simply passed along to customers in the form of slightly higher prices.
So, a higher minimum wage is much more likely to result in a cup of coffee that costs 15 cents more than it is to result in layoffs.
5. Higher minimum wages level the playing field between good employers and cheapskates.
The beauty of an across-the-board increase to the minimum wage is that it levels the playing field between businesses. Employers who have always wanted to pay their workers fairly will no longer have to worry about being undercut by unscrupulous competitors who pay poverty wages.
It’s a small price to pay for fairness, lower income inequality and a more robust economy!
6. The proposed increase to $15 is not “unprecedented.”
One of the main complaints of low-wage defenders is that the Alberta $15 plan represents an “unprecedented” jump in the minimum wage of nearly 50 per cent (from the poverty-level minimum of $10.20 in 2015 to the planned minimum $15 in 2018).
But the truth is that minimum wage increases of this magnitude are not unprecedented in North America … or even in Alberta.
For example, Ontario raised its minimum wage by 65 per cent over a shorter period in the ’70s, and the sky didn’t fall. The Alberta government made a similar jump in the ’70s, as did a number of U.S. cities more recently.
In all of these cases, employers predicted bankruptcies and job loss. But none of these outcomes ever materialized.
7. Employers are deliberately exaggerating the real scope to the increase.
Just as importantly, the effective increase faced by most low-wage employers is much smaller than 50 per cent because so few of them were paying the minimum of $10.20 in 2015.
In fact, only about two per cent of working Albertans were being paid the minimum at that time.
The truth is that about 80 per cent of Alberta’s 300,000 low-wage workers cluster between $12-15 an hour.
For an employer currently paying at the lowest end of this range, a new minimum of $15 would represent a 25 per cent increase, not a 50 per cent increase. And that 25 per cent increase would be staged in over a three-year period!
8. Anything less than $15 per hour is a poverty wage
When setting the minimum wage, our starting point should be our values.
Specifically, we should have a minimum that allows a person working full-time, full-year to live above the poverty line. Alberta’s current minimum wage of $11.20 doesn’t even come close to that threshold.
According to Statistics Canada, people living in any of Alberta’s major cities would have to earn at least $14.50 per hour – right now, not three years from now – in order to keep themselves out of poverty.
So instead of giving in to pressure from low-wage employers, Premier Notley should stick to her guns and move towards a minimum wage that at least resembles a living wage.
9. Even conservative economists say that low wages dampen economic growth
Far from hurting the Alberta economy during a recession, an increase in the minimum wage may be exactly what the doctor ordered.
A recent report from the traditionally conservative International Monetary Fund (IMF) concluded that income increases for the wealthy are actually associated with declines in economic growth – because they’re more likely to sock their money away or spend it in other jurisdictions. In contrast, “an increase in the income share for the bottom 20 per cent is associated with higher GDP growth,” said the report.
If we were to target the bottom 20 per cent of Alberta income earners for a raise that could help boost economic growth (as the IMF suggested would make good sense) who would we be talking about? Everyone earning less than $15 an hour, that’s who!
10. A fair minimum wage is one that’s set at about 50 per cent of the median wage
What’s a fair and appropriate minimum wage? As we’ve said, it’s a wage that allows all low-wage workers to live above the poverty line. Most experts agree that what’s needed to accomplish that goal is a minimum wage that’s set at about 50 per cent of the prevailing median wage. In Alberta, that would mean a minimum wage of … wait for it … $15.