Alberta Minimum Wage -2019 Election Issue

“Money won’t buy happiness, but it will pay the salaries of a large research staff to study the problem” Bill Vaughn

Looking ahead to 2019 election season, labor force issues will be the second most contentious … right behind provincial debt.

The right and left philosophies and voter bases are sharply divided. Remember that ugly business between the government and farmers about workers compensation insurance for farm workers? And now the NDP are in the midst of reviews of WCB and labor standards that tip the see-saw towards workers at the expense of employers.

The biggest issue will be the minimum wage!

It is like: “Oh yeah…. well my neoclassical economist Dad can beat up your revisionist economist Dad”!

Blizzards of factoids are produced to dispel each others’ “myths”. Increasing the minimum wage is good… No wait… another snowstorm says it is bad!

The reality is minimum wage policy can only be evaluated after the fact, so nobody’s position can be disproved. Severely Normal Albertans are advised to buy ear protection and a snowblower.

A Quick Snapshot

As of October 1st, Alberta has the highest minimum wage in Canada at $13.20 per hour. There is one more increase slated for next year to $15.

About 300,000 workers earn less than $15 per hour – just 15% of the labor force. (25% is the national average).

Of these 300,000 workers:

  • 150,000 work full-time

  • 115,000 have children

  • 175,000 are female

  • 68,000 have less than grade 12

  • 89,000 have grade 12

  • 50,000 are students

  • 103,000 are head of the household

  • 53,000 are spouses of main breadwinner

  • 110,000 are sons or daughters in the household

  • 78,000 work in food service and accommodation

  • 104,000 work in retail

Good Idea?

There is a bit of a movement by left leaning governments to support the $15 minimum wage. New York State is moving from $9 to $15 by 2021. So is Seattle and Pittsburg. San Francisco and Ontario are as aggressive as Alberta, planning $15 by 2018

Alberta has the highest average hourly wage in Canada at about $30.

In 2015, an NDP election promise was to address the inequality of a minimum wage of $10.

(Others say a $30 average wage proves the NDP are working on a problem that the marketplace has mostly solved.)

The rationale is:

  • A higher minimum wage reduces poverty and lowers the need for social programs like food banks
  • Improves the quality of life and health of those who are vulnerable
  • Improves employee satisfaction and productivity
  • Reduces staff turnover and training costs.

And it won’t really hurt:

  • Research says that job losses are minimal
  • Consumer spending will increase
  • Tax and program initiatives aimed have improved the small business environment
  • Not mentioned is the job creation tax credit that was part of the election promise. (That idea died a well deserved death as unworkable and expensive in 2016)

Bad Idea?

The Canadian Federation of Independent Business (CFIB) advocate against these increases:

  • They claim job losses will be much higher; thus throwing out of work the people that the policy is trying to help.
  • Layoffs, hiring freezes and slower employment growth will be outcomes of the policy
  • Minimum wage increases do little to reduce poverty since many minimum wage earners are part of families that are not low-income households. (e.g. students and spouses)
  • Tips and commissions increase the amount that food and beverage workers actually make
  • Both business and workers will face higher payroll deductions. CFIB calculates that a $15/hour wage earner will pay $700 more in taxes

The Edmonton and Calgary Chambers of Commence have weighed in:

  • The policy is being implemented much too quickly during the recession
  • Businesses will see a ripple effect as other staff who earn more than their minimum wage colleagues and subordinates, also seek raises
  • A blanket policy hurts trainees because employers will be reluctant to take on new staff.

So what to make of this snowstorm:

  •  Job losses will accompany this policy. What isn’t certain is how many. A recent study says probably 25,000 so far and another 25,000 by 2019. Of course this is disputed – and others put the number in the range of 15,000. It seems these numbers always get torqued by interest groups.

  • As an anti-poverty measure it is a blunt instrument because not all minimum wage workers are poor. That said, the steady use of food banks by the working poor is a signal of the financial struggle they face every month. Pragmatically, we can assume many workers will put the extra money to very good use.

  • Most other jurisdictions move much more slowly to increase the minimum wage. Alberta, in the midst of a recession, chose a very short timeline and embraced the $15 target without much research.

  • But in the retail politics of an 2019 election, don’t expect anyone to roll back from $15. The debate will be much more about finger pointing about callous conservatives and anti-business socialists.

And there will be a rolling avalanche of facts!

2 thoughts on “Alberta Minimum Wage -2019 Election Issue

  1. Rick, the only sources you quote are CFIB and Chambers of Commerce, both lobbying organizations. Comments by business lobbyists should not be confused with objective analysis.

  2. I took the profile data from the Alberta.ca. I guess I should have referenced them. I also summarized some of the thinking from the Parkland Institute but I didn’t directly quote them.

    I think the main point I learned form the exercise is that all opinions are skewed based on the values the proponents hold.