A fast-food restaurant in Northern Alberta recently closed, not for lack of business, but because it couldn’t find enough workers willing to work for $12 per hour, a rate more than twice the provincial minimum wage. While, until recently, Alberta had the lowest legislated minimum wage in the country, it had among the highest effective wage levels for lower income residents. Approximately one per cent of Albertans earn minimum wage as compared to 4.6 per cent of Manitobans. A strong economy and low taxes have resulted in minimum wage being almost a non-issue in Alberta.
With the Just Income Coalition calling for a 41 per cent increase to Manitoba’s minimum wage, we again we find ourselves immersed in a micro-level debate over adjusting legislated wage levels, while ignoring the macro-level debate about how best to grow the incomes of Manitobans.
While most people would agree that raising a family on $7.25 per hour would be next to impossible, it is important to ask some questions. Who actually earns minimum wage? What might happen if the province heeded calls for a dramatic increase? Is increasing the minimum wage the best way to help lower income Manitobans?
According to Manitoba Department of Labour, approximately four per cent of employees earn minimum wage. Of those, three-quarters were between 15 and 24 years old, two-thirds work part-time, 60 per cent were in school and 80 per cent had other forms of family income. It is clear that there are very few Manitobans who are trying to raise a family with their minimum wage job as their only form of support.
Proponents of increasing minimum wage argue that to allow those earning the lowest incomes to live on a decent wage, employers must be forced to pay a wage that will provide an acceptable standard of living. They argue that higher minimum wages results in higher business revenues as workers have more money to spend, a reduced need for social assistance, increased tax revenues and improved living conditions. The difficulty with these arguments is that they ignore basic economic principles that can cause significant minimum wage increases to have the exact opposite effect. Most minimum wage earners are just getting their foot in the door of the labour markets, and putting too high a price on their labour may mean that employers are unable to afford to take a chance on untrained recruits.
Also, if employers are forced to increase prices to accommodate the higher wages, those same workers will now pay more for their goods and services, potentially eliminating any benefit they received in the first place. Most worrisome is the situation where an employer cannot afford to increase prices and either has to reducing overall staff levels, creating fewer opportunities for those most in need of a job.
A well-paid, highly skilled workforce is a goal that we all should embrace, but accomplishing this will take more than government passing the buck onto business owners. If the province were serious about helping lower income families, why can a couple in Alberta earn $29,046 before paying any provincial income tax, compared to $14,765 in Manitoba?
Why can that same couple earn $2,043 more tax-free in NDP Saskatchewan than in Manitoba?
What justification is there for Manitoba having the lowest combined basic personal and spousal exemptions in Western Canada as well as being the only western province not indexing its tax system for inflation? Why is Manitoba the only province in Western Canada with a payroll tax, effectively penalizing those businesses that want to hire more employees or raise salaries? Rather than focusing on building a more vibrant economy that can provide improved wages to all, successive provincial governments have beat the "low cost of living, middle of the pack" drum. Electoral success appears to require a formula of lurching from issue to issue without rocking the boat. The province requires a much stronger vision, one that doesn’t just look to the next year, but looks five or ten years out.
A strong education system, increased access to training, reduced taxes and common sense regulations will have a far greater impact on improving the situation faced by minimum wage earners than any provincially imposed hike.
The upcoming Speech from the Throne is an excellent opportunity for the province to put forward its vision. Instead of the usual vaguely worded, shortsighted document, the province needs to articulate a solid plan to improve the lives of all Manitobans, with higher wages through economic success rather than government legislation.
Shannon Martin is the director of provincial affairs, Canadian Federation of Independent Business.