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Too Much Minimum Thought About The Minimum Wage

It would probably be a good idea to stay indoors this weekend. Civilization as we know it is about to come to a screeching halt. Unemployment is going to skyrocket, businesses are going to shut down in record numbers and basically the Canadian economy will implode leaving us all in penury.

And all because the Ontario government is raising the minimum wage by $.75 / hr.

I’ve read more pundit commentary, Facebook comments and posts and blog articles about this unprecedented disaster than I can count. Certainly it was far more than written about the alarming level of suicides by our veterans and military, Justin Trudeau’s announcement removing Liberal Senators from his caucus and the weather.

You’ve got to believe that’s a lot of chatter if it outranks how much people talk about the weather. Weather is a constant topic among Canadians.

I don’t disagree that a minimum wage that is too high can and probably would have a detrimental effect on business but are we really looking at an increase that is such a threat?

Consider the basic facts.

First, as a society we have agreed that there is a need for a minimum wage. Left to its own devices, business has too often proven that it will take advantage of anything and anyone in its quest for profits. That’s not a criticism, just an observation but it has led to government regulations on occupational health and safety, laws to prevent discriminatory hiring practices, maximum hours, minimum age and, of course, a minimum basic wage.

There hasn’t been much moaning and groaning about any of that; in fact, most people seem to agree that it is necessary to provide a safe and fair work environment.

Accordingly, Ontario has a minimum wage which it froze in 2010 at $10.25 / hr. It is now 2014 which means that the real value of that minimum wage has been reduced by inflation. Gas prices have increased along with food, mass transit fares, hydro rates and taxes but the minimum wage has remained static.

In other words, in terms of real dollars, people on minimum wage are earning less today than they did four years ago when we didn’t mind a minimum wage at $10.25/hr.

It’s true that employment is a serious issue facing this country but it is equally true that it has little to do with the minimum wage. Since 2006, there has been a paltry net increase of less than 150,000 new jobs in Canada and no increase in the minimum wage for years. Clearly other factors have a far more significant impact on employment including exorbitant hydro rates, the high cost of transportation and wages but not the minimum wage – union negotiated wages and benefits have priced too many jobs right out of the country.

And it isn’t just the branch operations of foreign-owned companies that have sent their jobs elsewhere. Canadian companies like Bell Canada have moved their call centres as far away as India and many manufacturing and technology jobs have been relocated out of the country where salaries and benefits are lower.

Others have suggested that it will lead to a reduction in minimum wage jobs and point to stats and figures to prove their point It may in the short term but not the longer term. The simple reality is that business didn’t hire those people out of some sense of altruism, it hired them because they were needed and raising the minimum wage by $.75/hr isn’t going to change that. The reality is that minimum jobs have consistently increased over the past decade.

In the end it really just comes down to this.

An increase of $0.75/hr amounts to a mere $0.19/hr each year since 2010.  I believe the only mistake the Ontario government made was in making the increase retroactive to 2010. It’s just one more example of how to take what is basically a good idea and screw it up. Politicians seem quite adroit when it comes to that.  It isn’t the increase in minimum wage that will cause difficulty for Ontario business, it’s having to track down all former employees since 2010 to give them retroactive pay increases. What a ridiculous imposition that is on a business.

None of this will stop the hyperbole, however. because most of the reaction to the government announcement is about stereotyping the working poor.  The stereotypes and predictions rain down on us like a torrential downpour.

All people earning minimum wage are: ‘stupid’, ‘lazy’, ‘uneducated’ and/or ‘unmotivated.’ The fact that slightly more than half are young people still living with their parents because they can’t find meaningful work to support themselves matters not to those who are married to their simple-minded illusions about the working poor. Many on minimum wage are working to pay their way through college or university and working while going to school seems pretty motivated to me. So does holding down more than one minimum wage job to provide for yourself and your family in the absence of a better paying job thanks to the complete mess governments and the high finance flyers have made of our economies.

The other thing I don’t get is the suggestion that instead of a modest increase in the minimum wage to keep abreast with the rising cost of living; government (meaning you and I) should simply pay people a guaranteed minimum income whether they are working or not.

That was discussed in some detail recently in a National Post column written by Andrew Coyne.

Think about that for a moment. Raising the minimum wage for those who are working at the bottom of the income scale will devastate employment but paying a guaranteed income won’t. Is it simply because business won’t have to pay the guaranteed income (that would be left to taxpayers)? I don’t think so. I think it is just one more example of a knee-jerk reaction based on theories that don’t have much actual fact or even thinking behind them.

No society can prosper if it pays people more  to do nothing than those who are willing to work and try to earn their own way.

Demonizing those people serves even less useful purpose. It simply underscores just how little thinking we are willing to invest in serious issues these days and illustrates once again just how parsimonious and mean-spirited we can be – when it isn’t our lifestyle under attack.

We’re Canadians and there was a time when whether we were conservative, liberal or otherwise – we were better than that.


© 2013 Maggie’s Bear

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  • eustace3

    Just to let you know, your web deign does not work on my computer application. The text is forced into a narrow vertical band and the disqus comments takes many tries to boost up. Takes real effort and patience to read your blog.

    • MaggiesBear

      I appreciate the heads up. What browser are you using?

      • eustace3

        I use Opera for all the BT sites. I tried Firefox and there is no improvement. In particular Disqus is very erratic takes forever to spool up.
        Yours is the only BT site I have trouble with but it makes reading it a real chore. May be only my computer.

        • MaggiesBear

          I don’t know what to tell you. The site works fine in Chrome, IE and usually in Firefox. It also has been optimized for mobile access.

          • eustace3

            Thanks not to worry unless you receive other complaints. Might be some personal hitch here.

  • Cytotoxic

    First, as a society we have agreed that there is a need for a minimum wage.

    Who is ‘we? I never agreed to this. Minimum wage is not economically bankrupt but immoral too. It is my right to work at whatever rate I decide and it is the employer’s right to offer work at whatever rate he sees fit.

    • MaggiesBear

      You need to study history to understand why there is a minimum wage.

  • oldwhiteguy

    a minimum wage is always the bottom. moving the bottom up will not improve anyone’s life. the wage will still be the bottom and the cost of living will also match any raise. getting out of the bottom of the pile is how things used to work. no one wanted to stay at the bottom earning minimum wage yet today it seems many are more than happy to embrace the bottom. have we destroyed our economy to the point that there is no longer anything but the bottom. I would hope not.

    • MaggiesBear

      I think what most people have missed is that this has nothing to do with overcoming poverty or rewarding those with limited skills and education with disproportionate incomes. It doesn’t even have anything to do with redistribution of wealth. It is simply about raising the minimum wage in line with inflation. There is no reason why the real value of minimum wage should be allowed to be eroded by inflation which is precisely what happened in Ontario when it frozen at $10.25/hr in 20-10. Nobody else had their wages frozen for four years; why should those at the bottom of the scale have theirs frozen for that long?

      • oldwhiteguy

        you are saying it should be raised even if it adds to inflation? which it will.

        • MaggiesBear

          You can’t be serious. Add to inflation? There are just over 400,000 people in Ontario earning minimum wage and the total cost of this increase amounts to less than $4 million dollars province-wide for the entire year. That’s less than many of the individual CEOs and senior executives of most banks and large corporations in Ontario. The Harper Government spent $100 million advertising its economic action plan and the top five players in the NHL are earning almost $60 million per year between them.. .. and you want to lay the threat of inflation at the doorstep of those earning minimum wage?

          • oldwhiteguy

            every increase in any wage adds to inflation.

            • MaggiesBear

              You’re right and just to correct something in my comment; ;the total cost is $34,+ million, not $3 +. We were going out and I was in a hurry and dropped a zero. But I stand by what I wrote.

              Since 2010, we’ve experienced 6.2% inflation to the economy. Those on minimum wage had their income frozen which meant they got hit by both increased cost and decreased value of their income. By contrast, the top of the food chain saw significant gains in their incomes while the middle basically kept pace with inflation. Why is it that it is those making the least that should not only be blamed for inflation but penalized by it while everyone else protects themselves?

  • Pingback: Too Much Minimum Thought About The Minimum Wage | Grumpy Opinions()

  • eustace3

    The Liberals and the press have done a terrible job of reporting on this wage increase. First off, “retroactive” does not mean recalculating all the pay ships for the last 4 tears. If the government desires a minimum wage for 2011-13 for historical calculations they have it; The new wage can be calculated with the CPI increase between 2010 and 2013 without doing the intervening linking; the answer will be the same
    However, the new wage is not $10.25 linked to inflation which the government claims. The Ont CPI All Items, for 2010 is 116.5 and for 2013 is 123.0; the inflation rate is about 5.58%. This would suggest a new wage of $10.82. The government is rounding this up 18c to the nearest $ 1/4.
    Use whatever CPI indexes you wish, you cannot get an even $11.00, indexing to the 10.25. wage.
    The CPIs used are the annual figures slightly different results could be had by picking a particular month; still the increase between 2010 and 13 is about 5.58%, not the $11.00/1025 7.3% the government actually used.
    When Ont Liberals are doing the math, it’s worth paying attention.

    • MaggiesBear

      We can sing and dance the numbers all we like, the end result is the same. The minimum wage was frozen in 2010 and has been eroded by inflation over the past four years. This increase is not a disproportionate reward for unskilled labour, it is a corrective measure to bring the real value of the minimum wage back in line with where it was four years ago. We can quibble over the percentages but in the end it’s arguing over pennies and isn’t going to have the horrendous impact on business so many are predicting. I’ve run more than one business in my time and minimum wage was the least of our concerns.

      • eustace3

        What I was trying to address was 2 grave misconceptions in the announcement.
        “Retroactive” does not mean recalculating wages back to 2010 and issuing new T4s. It merely allows the government to list the rates for 2011 and 12 for anyone needing those benchmarks. Even this government would not attempt anything so foolish.
        I have no objection with the $11,00, or $10.85 or whatever, but it is not the previous wage adjusted with a CPI, as this government is claiming. If you are proposing a formula to use one must be precise in describing the formula. If it is the CPI rounded up to next $.25, just say so.

        • MaggiesBear

          Thanks for the clarification. I appreciate it.

  • Dollops – Eric Doll

    Leaving aside that minimum wage policy simply erases jobs or pushes them into the black market, I want to comment on the notion that a minimum income policy is beyond consideration. Govt and quasi-govt entities dole out pensions, unemployment benefits, workers’ comp welfare, health, education and other grants/entitlements to the extent that every citizen taps taxes and mandated contributions throughout life.
    Can you imagine a citizen’s dividend paid out of govt revenues into a trust account for each individual Canadian throughout his life? Out of this account the citizen or his guardian could draw funds to cover a specified number of needs payable only to private providers (non-profit or for-profit). An essential element of such a trust must be that at some time the surplus funds be released to the individual with no strings attached. Of course the details would have to much more extensive but you get the idea. Now think about what that would do in terms of humbling government, reducing bureaucracies, improving education and health delivery and encouraging individuals to think about their choices in life.

    • MaggiesBear

      There’s nothing wrong with what you propose but that isn’t a minimum income guarantee; it’s an insurance-like investment by individuals. Guaranteed income would be paid to anyone earning less than a specified annual income regardless of whether or not they had ever paid into a fund or had ever worked. All of the other examples you quote require investment by individuals and the amounts paid out are very much based on earnings and the amounts paid in by the individual.

  • Randy

    What people should realize, and as Bear so clearly states, is that
    the workers making minimum wage are doing so to improve their
    lives. $0.75 per hour, over 33 hours/week since most of these jobs
    are part time to eliminate any benefits, adds up to $24.75 per week.
    Hardly a job crusher in my books. If we don not pay them properly
    to work, and in my books minimum wage is not proper compensation, then they will stop working. Then the government
    will have to help them, which gets it’s money from tax revenue,
    which in turn comes from corporations and businesses that hire
    the workers. Seems to me to be in everyone’s best interests to
    eliminate the middle man ( government ) and pay the workers.
    If, as we like to say, we are a caring and just society in this
    country, lets start by paying our workers a minimum wage that
    helps them improve themselves, not just exist.