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Comment: The case for a $15-per-hour minimum wage

Despite years of incremental increases in the minimum wage, more than 600,000 people still live in poverty in B.C. On Sept. 15, B.C.’s minimum wage will increase to at least $11.25 per hour. As a young person, I hated the minimum wage.

Despite years of incremental increases in the minimum wage, more than 600,000 people still live in poverty in B.C. On Sept. 15, B.C.’s minimum wage will increase to at least $11.25 per hour.

As a young person, I hated the minimum wage. To me, it was the resort of the idle and the incompetent. It created complacency and drained the entrepreneurial spirit.

Now, however, I believe we should increase the minimum wage to $15 per hour. Further, it should be increased annually at a rate of 1.2 times the rate of inflation.

My early view of minimum wage was based upon the work environment of the late 1970s and early ’80s. At that time, you could get a minimum-wage job, develop skills and move to a higher-paying job.

In 1983, I worked for minimum wage at 7-Eleven. I worked with Bruce. He was the night janitor, also on minimum wage. Bruce used that experience to get a union job at a hospital doing the same thing, but being paid a lot more. Those jobs are gone. In many cases, they have been replaced by subcontractors paying minimum wage.

Well-paid, low-skilled union jobs have declined. According to StatCan, the highest decline has been for men; 42 per cent of men held unionized jobs in 1980, falling to 29 per cent in 2014.

Minimum wage is no longer what young people start out with as they develop skills. Now it is the economic foundation for older workers and families.

Over the past two decades, we have seen the proliferation of minimum-wage, low-skilled employment. These jobs do not develop transferable skills or allow the employees to transition to higher-paid employment. As the high-paid, low-skilled jobs have disappeared, we have seen the rise of the “working poor.”

Minimum-wage jobs are necessary to our economy. They need to be done. The dilemma is a moral one: Do we ask these workers to do these jobs at the same time as we ask them to live in poverty?

A 2015 study by the Metcalf Foundation found that the number of B.C. residents living in poverty had remained stable at about 600,000. Of these, 450,000 were working full-time.

The study notes that the percentage of the population living in poverty has declined to 13 per cent in 2014 from 15 per cent in 2000. However, this decline was largely the result of population growth rather than any improvement for the poor.

From this, I conclude the increases in minimum hourly wage from 2000 ($7.60 per hour) to 2014 ($10.24 per hour), has had no real impact on poverty in B.C. The principal factors are that the minimum wage has been too low, and increases to it have been too slow.

For example, the minimum wage is a little over four times the minimum wage in 1974. However, costs have increased at a much faster rate.

Cars cost an average of $2,200 in 1974, while in 2014, the average was $33,000. A postage stamp cost eight cents in 1974, and 85 cents in 2014. B.C. homes cost an average of $39,000 in 1974.

For minimum wage to have any meaningful impact on poverty, the base income generated from a 37.5-hour week must meet basic needs. Right now, it does not. Therefore, we have hundreds of thousands of people in B.C. who are poor despite working full-time.

An increase in minimum wage does affect business, particularly small business. But government can address these impacts when it introduces a higher minimum wage.

Some options are:

• Government creating income-tax credits for industries that are disproportionately affected by the increase;

• Reducing corporate taxes;

• Cutting WorkSafe B.C. and other employer costs; or

• Increasing the amount of commission paid to small businesses for collecting the provincial sales tax.

A major increase in the minimum wage cannot be accomplished in isolation. It needs to be balanced with incentives for business. To increase the wage without considering the needs of the employer is economic myopia.

By minimizing poverty, you create economic activity. Poor people spend their entire income. You create consumers and generate business. You also give people dignity, which is priceless.

 

Michael Butterfield is a lawyer and mediator in Victoria.