When people find out they are going to be making more money, it is usually cause for celebration. The recent increase of Alberta’s minimum wage however, has launched a new episode of debate on the fallout of increasing base earnings in the province.
While the Alberta Federation of Labour (AFL) was pleased with the recent minimum wage hike, they claim it still isn’t enough to match the cost of living. “The province’s senior labour central contends that the increase is too small because the base rate is too low.” On April 1 of 2008, the minimum wage will increase from the current $8 an hour standard to $8.40.
The AFL’s position is that while they welcome any increase in the minimum wage, the recent hike just isn’t enough. AFL President Gil McGowan says, “We estimate that a living wage right now in the province would have to be at least $10 per hour. So the government-mandated increase to $8.40 per hour as of April 1 this year is actually very disappointing.”
In 2007, average weekly earnings increased 5 per cent, so minimum wage will increase 5 per cent from $8.00 to $8.40 per hour. “The problem with linking minimum wage increases to the growth in average weekly earnings is that it assumes that the phenomenal growth taking place in some municipalities and industry sectors is happening everywhere,” said the Canadian Federation of Independent Businesses, which contends that the increase will hurt small business owners. “This change could have a severely negative impact on employers in certain regions and industry sectors that are not experiencing a sharp increase in economic growth, particularly smaller municipalities and the restaurant and tourism industry.”
In a resource-based economy like Alberta’s, where the economy continually fluctuates, therecould easily be a situation where entry-level labour is priced too high. That could in the long run decrease the number of jobs, especially for entry-level workers.
British Columbia addressed this problem by creating a lower minimum wage for entry level workers, which is basically a “training wage” that allows business owners to compensate for the investment required to train new employees. Quebec and Nova Scotia have similar alternatives.
As of January 1, 2008, Alberta ranked near the middle of Canadian provinces in minimum wage, even though Alberta does have the lowest income taxes of any Canadian province. Ontario’s minimum wage is scheduled to exceed $10 in 2009, and even with the increase, Alberta will still be below the minimum wage standards in Nunavut, Manitoba and the Yukon.
According to the Consumer Price Index (CPI) survey, in 2007 Calgary and Edmonton had the highest costs of living of any major Canadian city. That statistic is very surprising, in light of the fact that Calgary and Edmonton were being compared to cities who are generally thought of as having higher costs of living: cities like Toronto, Vancouver, and Ottawa. The CPI statistics are based on the costs of housing, household items, food, transportation, etc. In fact, the index showed that Alberta cities hadmuch higher costs of living than did any of the cities with a higher minimum wage.
Those that oppose minimum wage increases say that it leads to major problems, especially for small business owners. A higher minimum wage, they claim, can lead to higher unemployment, increases in prices to consumers, less recruitment of new employees, and less employee benefits.
The AFL says that right now in Alberta, there are only about 70,000 workers making minimum wage, with many more earning an hourly wage just above the minimum. “What Alberta workers need is a minimum wage that actually reflects the high cost of living in Alberta,” said McGowan. “A minimum wage, after all, should prevent full-time workers from living below the poverty line.”
That poverty line in the year 2000, for a family of four, was just above $32,000 in the city of Calgary. After the increase in April, making $8.40 an hour, the average worker putting in 40 hours a week with no vacation would gross little over $17,000 annually, before taxes. It should also be noted that Edmonton has recently experienced the highest increase in poverty of any Alberta city.
Premier Stelmach has said that only 3.5 per cent of Albertans earn minimum wage, with most of those being teenagers. However, raising the minimum wage has an impact on all hourly wage earners. Even with a minimum wage increase to $10 an hour, working 40 hours a week with no vacation, the Alberta worker earning minimum wage would barely eclipse the $21,000 annual earnings mark, still well below the year 2000 poverty line.
While it is a relatively low number of workers in the province that currently earn minimum wage, it is apparent that those workers are not able to sustain themselves, and that conclusion is reached using eight-year-old statistics. Since the year 2000, the cost of living has climbed dramatically. While there are consequences for increases in minimum wages, it does go a long way in improving the quality of life for those Albertans presently earning minimum wage who can barely get by, and has recipricol effects on thousands of other workers.
Barrhead Leader, Tues Apr 1 2008
Byline: Andrew Coffey