Jun. 16, 2010 - Issue #765: Whose Pride?

Lowest of the low

Alberta will soon have the lowest minimum wage in the country

On Oct.1, Alberta's minimum hourly wage will become the second-lowest in Canada. That's when Prince Edward Island's minimum, currently 10 cents below Alberta's at $8.70, will jump to $9. New Brunswick, which currently sets its minimum at $8.50, will raise the bar to $9 on Sep. 1, leaving Alberta only ahead of British Columbia's $8 hourly wage.

The province might not be second-last for long, though. On Tuesday, provincial think-tank Public Interest Alberta urged a government committee currently reviewing minimum wage in Alberta to increase it. With advocates on both sides of the issue, predicting what government will do is difficult.

"A fair minimum wage is really what the market will bear," says Mark von Schellwitz, a vice president with the Canadian Restaurant and Foodservices Association. The CRFA employs nearly 14 000 Albertans at minimum wage. "It should be dictated by labour market demand," he says. Von Schellwitz would like to see minimum wage stay at $8.80.

Bill Moore-Kilgannon disagrees. Moore-Kilgannon, executive director of Public Interest Alberta, thinks a low minimum wage carries hidden costs for the province as a whole.

"People who come from low-income families tend not to go on to college and universities," he says. "People who are living in poverty tend to use our healthcare system significantly more."

According to statistics compiled by Public Interest Alberta, a substantial portion of Albertans fall into that category. More than 112 000 people in Alberta earn less than $10 an hour, including nearly 40 000 Edmontonians. Raise the bar to $12 an hour and the number of Albertans jumps to almost 225 000.

Further, over 60 percent of Albertans earning less than $10 an hour are women. Moore-Kilgannon says it's a result of underrating the sort of work women often do. "Women are ending up in jobs that are low-wage jobs, and it's not to do with education," he says. "It has to do with the undervaluing of the type of work that women are doing."

Moore-Kilgannon added that low minimum wage also contributes to the social time-bomb of baby-boomer retirement. Low-income earners tend to rely heavily on social safety nets like the Old Age Security pension when they retire, he says.

"Many people end up, for various reasons, in these low-wage jobs, and they do not get out of them," he says.

Too many people relying exclusively on government funding in their retirement could create huge problems, says Moore-Kilgannon. "There are long-term impacts of taking a very, very narrow, simplistic economic view of this," he says. To combat poverty, he'd like to see minimum wage around $13 an hour. Currently, Ontario's hourly minimum of $10.25 is the biggest in Canada.

Von Schellwitz thinks raising minimum wage any higher will make it much tougher for teens looking for their first job to find work as employers react to higher labour costs.

"If you raise the minimum too quickly, you're actually robbing those people of employment opportunities," he says. "What the right level is, is very much up to speculation."

But according to Public Interest Alberta's statistics, nearly 60 percent of Albertans earning less than $10 an hour are over the age of 20. Seventeen percent are over 45.

Von Schellwitz also expresses skepticism that increasing minimum wage can help reduce poverty. "Numerous economists and academics have pointed out that minimum wage policy is a very blunt poverty tool," he says, because it eliminates jobs even as it makes the remaining ones more lucrative. "Minimum wage is not an accurate reflection of poverty."

A more effective measure of the Albertan economy, he says, is the average wage, and Alberta does quite well in this regard.

Elwil Beukes, a professor of economics at the King's University College, says economists don't always agree on the costs and benefits of minimum wage increases.

"Like everything in economics, you have more than one view on this," he says. "Those on the side of the employers normally argue 'no, this doesn't do any good,' while employees and their supporters generally take the opposite view," he says. "You can say we will forever be arguing from different positions, with an eye toward different objectives."

The provincial government is considering the question of the minimum wage as part of an all-party committee review on the economy forwarded after the release of the budget this past Februrary. A spokesperson for the ministry has stated recommendations are expected to be forwarded to Minister of Employment and Immigration Thomas Lukaszuk by the end of the year for review by MLAs in early 2011. V

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