Thursday, March 17, 2011

Minimum wage increase good policy and politics

Christy Clark’s quick action on the minimum wage is both good public policy and politically smart.
Clark made increasing the minimum wage one of her first acts. The wage - stuck at $8 since 2001 - will go to $8.75 May 1, $9.50 on Nov. 1 and $10.25 the following May.
That will more than make up for lost ground over the last decade.
Practically, the change makes sense. About 40,000 employees in the province are paid minimum wage. Some work for minimum wage briefly, or are part-time workers supplementing family income.
But some are living and even raising families on the wage. Leaving them without an increase for a decade, mired in worsening poverty, is simply wrong and exploitive.
Most of the business community have accepted the need for an increase for some time, even as Gordon Campbell refused to act.
The increase still rankled with some. The restaurant industry warned about job losses.
But B.C. went from having the highest minimum wage in Canada in 2001 to the lowest today. Even after first increase to $8.75 in May, B.C. will still have the lowest.
If restaurants in every other province can operate successfully with higher minimum wages, surely managers and owners in B.C. can.
Some businesses warn that raising the minimum wage has a ripple effect - that all low-income workers will be affected.
But again, businesses in other provinces deal with that. B.C. businesses were able to pay higher real wages in 2001, based on the minimum wage then. Why not now?
And businesses worried about the size of the increase can reflect on their failure over the last decade to support small, regular incremental increases.
There’s an underlying philosophical issue at play.
A free market is generally a good way to determine pay. Employees offer their services; employers bid for them. Those with skills and a track record command more; if they contribute to a company’s success they are rewarded out of fear they might leave. (In real life, it’s not quite so tidy.)
But we’ve agreed people without bargaining clout, who do a fair day’s work, shouldn’t be protected from the effects of market forces. Just because some can only command $10 a day doesn’t mean an employer should be able to pay that little.
Or most of us have. The Campbell government’s long refusal to increase the minimum wage began to leave the impression it didn’t really believe in the concept.
Clark’s quick and significant action signalled a different approach, emphasized when she said the increase was “long overdue.” By phasing in the increase, she gave companies time to plan. And she linked it all to the “family first” theme.
The move was also quite a contrast to Campbell’s first act in government, a reckless 25-per-cent income tax cut that hadn’t been mentioned in the 2001 campaign and plunged the province into a deep deficit.
Clark didn’t take the next logical steps. The minimum wage should be indexed to the cost of living or the average wage in the province — like MLAs’ salaries - so big catch-up jumps wouldn’t be needed.
And she could have announced action to help another group of dirt-poor British Columbians who have seen their real incomes eroded over the last decade - people living on income and disability assistance.
You can’t really have a family first agenda when children are being raised in dire poverty. But income assistance for a single parent with two children, deemed employable, is less than $300 a week (and less than a minimum wage job). Those children are in trouble.
Still, changes to rates or to give people on income assistance the chance to earn a few dollars without being penalized - a move that would cost the government nothing - might be just ahead.
Meanwhile, give Clark credit for “long overdue” and equitable action on the minimum wage.
Footnote: Clark also eliminated the $6 "training wage" employers were allowed to pay new hires.
But she announced a $9 minimum wage for servers in establishments with liquor licences. Their income generally includes tips which take them above the minimum wage level.


Anonymous said...

"That won’t quite keep up with the cost of living increases since the last increase a decade ago, but it will be close."

The Bank of Canada inflation calculator shows $8.00 in 2001 is now worth $9.79 in 2011.
CC will have a hard time implementing her Families First agenda with Kevin "Tax Cuts for Corporations First" Falcon controlling the purse strings.
For the record: "Campbell’s first act in government, a reckless 25-per-cent income tax cut" was deliberate, and with malicious forethought, attack on Unions (remember the structural deficit?). US states like Wisconsin and Michigan are doing the same treacherous trickery now.

paul said...
This comment has been removed by the author.
paul said...

Anon 6:09
You're right. Thanks for the correction; I relied on my memory for the current value. I calculated at $9.25 but remembered it as $10.25 this year, and assumed an increase by 2012.
I fixed it in the post; again, thanks.

DPL said...

BC Chamber of Commerce said the increase is too high and too quick. I guess they figure yen years is too short a time for them to gear up for a small pay raise for workers

fries wid dat? said...

There will be plenty of wiggle room while the training wage provision exists in its curent form.

Anonymous said...

How patronizing to peg the liquor servers' hourly rate lower than the rest, on the assumption that they will make enough in tips to repair the discrepancy.

Why should the government be trying to decide how much is enough for any particular worker to earn?? Very reminiscent of thir "training wage" philosophy.

If salaries were based on need alone, a lot of money could be clawed back from the fat cats in power.

Anonymous said...

What about raising the taxes of the obscenely rich and removing most of the write-offs. Michael Moore said it very well when he stated, factually, that the wealth of 400 obscenely rich people in the US have more money and assets then 155 million Americans COMBINED or in other terms, 1/2 of the population of the US.
If you take a look at our obscenely rich list in Canada, I would suspect that the gap is even worse.
What really makes me angry is that they should be supporting education systems, that is where they get all the talent that MAKES THEM OBSCENELY RICH.
How damn much is enough.
Canada is not broke, there is no reason for the 'health care' scary ads, or the pension plan is going broke. It is all a bunch of propaganda spewed by the owners of the rags called news papers and TV news.
Tell a lie long enough and often enough and people will begin to believe it.

Anonymous said...

Tell a lie long enough and often enough and people will begin to believe it.

That is right - just listen to Falcon, Coleman, Clark, Bond, Bell etc - they are all the same without any variation. Wait - did they undergo labotomies or extraction, prior to being hired ?


Anonymous said...

It's a good policy move by Clark because a very large majority of those involved with small businesses (owners and employees alike) will continue to vote for the Liberals, regardless. They are never, ever voting NDP and realize that a vote for the Conservatives will simply split the right/centre coalition that the Liberals have in place. As well, in discussing minimum wage with a number of friends who are small business employers, the first thing they say is that they never pay the minimum wage, but in fact pay the higher wage that has now been proposed.

I was glad to see the training wage ditched. Just seemed to reek of cheap Dickensian child labour to me.

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Izz said...

This is a very good post. In Malaysia, we have yet to impose the minimum wage policy but there are works being done in some of the industry to implement the minimum wage policy such as the general workers in the plantation field and also the security guards working in banks and others. However, compared to other countries, Malaysia is still lacking in terms of implementation. Hope the policy will be implemented much sooner rather than later as Malaysia aims to be a high income economy by year 2020.