The Declining Minimum Wage
Apr 12, 2007
Manitoba’s minimum wage, like those of all Canadian provinces, is reviewed and adjusted on an arbitrary basis. It needs to be indexed to some measure of economic performance or wage rates, and should reflect a desire to help full-time minimum wage earners at least reach the poverty line.
Recently, the Canadian Centre for Policy Alternatives (CCPA) released a study entitled Bringing Minimum Wages Above the Poverty Line. Authored by Stuart Murray and Hugh Mackenzie, the report takes a serious look at the evolution of the minimum wage over the last few decades and illustrates its relative decline since the late 1970s.
Traditionally, much of the discourse around the minimum wage has focused on poverty levels. But more recently, we’ve seen an increasing level of discussion around income inequality and the ‘gap’ between rich and poor in Canada. A poll recently conducted by Environics Research for the CCPA found that 88 percent of Canadians believe that raising the minimum wage to a level that will raise workers in full-time minimum wage jobs out of poverty would be an effective way to reduce the gap.
Advocacy for a higher minimum wage has been gaining momentum across the country, with a variety of regional campaigns arguing for a minimum wage of $10. Interestingly, no government in Canada has ever adopted a consistent approach to determining the minimum wage. It seems that it has always been more of a political consideration than an economic one. Because of this, the minimum wage has fluctuated greatly over time. On April 1, 2007, Yukon became the first jurisdiction to tie annual increases in its minimum wage to the Consumer Price Index.
The minimum wage increased, in real terms, into the late 1970s. Adjusted for 2005 dollars, Manitoba’s minimum wage reached its peak in 1976, when it was $9.98. However, after this period the minimum wage dropped steadily, and reached its low point in all provinces between 1984 and 1990. Manitoba’s reached its low point in 1993 when it was $6.24. Since that time, however, the minimum wage has increased only slightly. On average, minimum wage workers now make an average of 20% less in real dollars than they did 30 years ago.
Much of the debate concerning this issue revolves around the purpose of the minimum wage. Is it to encourage entry-level jobs for new workers or youth? This does not seem to be the case. The study indicates that almost 20 percent of workers in all age categories earn less than $10 an hour. Is it to ensure that those with full-time jobs earn enough to at least meet the poverty line? If so, then the minimum wage has failed. Originally, it was designed to impose a broad and enforceable standard on employers that would guarantee a minimum level of income for unskilled and non-unionized workers. It was also aimed at preventing workers from trying to undercut each other by agreeing to work for less than someone else.
Whatever the rationale, there seems to be solid evidence for raising the minimum wage. Arguments against doing so – usually by the business community – don’t really hold any water. There is no compelling evidence to suggest that boosting it would result in any significant job loss. The Federal Government’s own 2006 review of federal labour standards – Fairness at Work: Federal Labour Standards for the 21st Century – recommends that “the government should accept the principle that no Canadian worker should work full-time for a year and still live in poverty.” It suggests that a federal minimum wage be reintroduced and eventually raised until it meets the low-income cut-off (LICO) index.
Provincial governments might be well advised to introduce a similar strategy to ensure that the minimum wage becomes a more realistic one. By creating a process whereby the minimum wage would be reviewed and adjusted on a regular basis, it would be more likely to remain at a reasonable level.
Comments
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Big Companies can surely pay more, but some small businesses, could not handle a higher min. wage. I think $9.00 is fair, $10 is a little high.
JimCotton - -0001-11-30 00:00
I'm just wondering, JimCotton, what evidence your comment is based on? Are you a small business owner? Have you read any studies or reviews on labour standards or economic performance? Or are you just talking out of your a**?
redSAID! - -0001-11-30 00:00
WHY MINIMUM WAGES? (the FACTS) Manitoba’s Minister of Labour announced this week “Manitoba’s minimum wage will increase April 1, rising by 40 cents to $8 an hour, encouraging people to enter the labour market and continuing to help lower-income earners.” With the change coming into effect April 1, the rate will have been increased by 33 per cent since 1999. Human Resources and Social Development Canada says: “The minimum wage is a basic labour standard that sets the lowest wage rate that an employer can pay to employees who are covered by the legislation. Today, one of its main purposes is to protect non-unionized workers in unskilled jobs, although it can also influence, directly or indirectly, the level of compensation of other employees as well. A minimum wage constitutes a floor above which employees or their unions may negotiate with management for higher remuneration.” A number of coalitions of labour, mainly groups of women, immigrant and visible minorities, students and faith and anti-poverty groups have lobbied to develop campaigns to “Make the Minimum Wage a Living Wage.” These are some of their current objectives: 1. Reinstate a federal minimum wage, setting it initially at $10 an hour, with annual adjustments upward for inflation. 2. Raise provincial and territorial government minimum wages to $10 per hour, with annual adjustments upward for inflation. 3. Pressure employers to pay at least $10 per hour and support calls for raising the minimum wage to $10 per hour. 4. Urge municipal governments and universities to adopt living-wage policies that require procurement and service contractors to pay at least $10 per hour. Our National Union, NUPGE says: “The City of Ottawa has unanimously passed a resolution endorsing a $10 an hour minimum wage and petitioning the Ontario legislature to get on with the passage of Bill 150, putting the new rate into effect immediately across the province. Bill 150 is the New Democratic Party’s Living Wage Act, introduced last fall. The proposal has already gone through first and second readings. The surprise endorsement of the NDP initiative by the entire city council is drawing rave reviews from community and labour groups, who see the symbolism of the country's National Capital taking such action as sending a strong signal to elected politicians in all parts of the country.” The Canadian Labour Congress has said a single person working full-time in Canada needed an hourly rate of at least $10 to reach a poverty-line income. In 2007, for someone working full-time, that means an annual income of less than $16,000. Some try to support a family on that. To see the minimum wages across Canada: http://srv116.services.gc.ca/wid-dimt/mwa/index.aspx?report=report1
Debbie N. - 2007-04-16 10:50
Actually I have a small business with 10 employees redSAID!, I pay them about $9.00 an hour, if I had to pay them $10, I would have to raise my prices, because my profits are about $9 per hour for myself. So don't accuse me of talking out of my ass.
JimCotton - 2007-04-16 15:43
I wasn't accusing you of talking out of your ass, JimCotton, I was just ASKING you to support your statements with something more substantial than just an offhand comment.
redSAID! - 2007-04-17 18:19
fair enough redSAID!. I just can't stand it when people think I am getting rich off my business. Sometimes my employees make more than I do with the hours I put in.
JimCotton - 2007-04-17 22:58
Jim, What kind of business are you running? You sound like an outspoken guy, but a fair man to work for.
Anonymous - 2007-04-18 08:55
I like to think I am fair !! http://jimcotton.blogspot.com
JimCotton - 2007-04-19 19:02