Minimum Wage All the Rage

“The boss said if I do really, really good over the next three years, he’ll put me up to minimum wage!”

“The boss said if I do really, really good over the next three years, he’ll put me up to minimum wage!”

Did you feel that enormous lurch to the left? Kind of made Albertans feel a bit queasy, like car sickness or a Tilt-a-Whirl ride after a corn dog and mini-donuts.

Don’t worry about the left-hand lurch. That’s just our new premier discussing implementation of a $15 minimum wage in Alberta. This action will not only raise our wage from among the lowest in the country to the very highest, but put us close to the top of the field world-wide, compared to long-time leader Australia (set at about $18 Cdn). They don’t tip, mind you, which I applaud wholeheartedly, since it’s a seriously dysfunctional system.

The business community is predictably crying and wailing and gnashing their excellent dental benefit-perfect teeth at the prospect. They predict companies will be laying off people en masse and automate every operation automatable causing rampant joblessness and a chill in hiring that would make the South Pole appear balmy.

On the other side of the ledger are the leftists and progressives who claim this new rate is practically macro-economy neutral but immensely helpful to the micro-economies of those that receive the almost 50 per cent increase. They also see it as a fairness issue that will help equalize the distribution of income better and solve the poverty problem. Most importantly, perhaps, they view a $15 wage as a reflection of the value of human dignity.

Scouring the Internet comparing statistics and points of view is an interesting exercise. From the reams of information I gleaned (while paying close attention to the leanings of the sources), I believe the reality is somewhere in the middle but much closer to the progressive side of the spectrum’s view. There is no doubt it will hurt the Mom and Pop operations most. Eventually, however, wherever a high minimum wage has been imposed, the economy reacts as expected. Prices do go higher but in the fast food sector, for example, only by about 4 per cent for every 10 per cent the wage is raised. Businesses remained as profitable as they ever were and service sector workers were able to earn a higher net income and enhanced purchasing power which stimulates the economy.

This is at odds with the recent opinion by Warren Buffet, darling of the progressives, in the Wall Street Journal. Buffet claims a high minimum wage distorts market forces and causes job losses. He much prefers people earn tax credits instead, which is hardly a surprise. I’m sure he’d much rather have government pay the extra wages the working poor need, rather than employers; being an employer himself. Mind you this is the same guy who bought huge into Canadian and American railways along with his buddy, Bill Gates, then funded environmental groups who fight pipelines. Yeah, I’m going to trust his less-than altruistic opinions.

In fact, thanks to Mr. Buffet, the Notley government (still getting used to typing that) has a great argument to make about their initiative that should appeal to right-wing thinkers and libertarians. By interfering in the market by setting a high wage, they are, at least, allowing the market to manage the reality that people should be able to live a half decent life by having a job. This makes way more sense than having the government make up the shortfall in the gap between where they are currently at and where they should be. As anti-temporary foreign workers love to explain, it’s not the government’s job to ensure businesses have a pool of cheap labour to draw from. If there isn’t enough of a certain demographic for a business in your area, build in a different area or build a different business.

Still, the case isn’t clear how this extreme measure with a short, three year implementation schedule will affect either the economy or society as a whole. Raising people’s wages won’t stop all homelessness or poverty. Some are unemployable, including the incurably lazy which no business wants in their workforce. Some have mental illnesses and some have kids that need care which costs as much per hour as they would make at our current minimum wage.

It is a bold move on the part of Notley. It establishes right off the hop this is a different type of leadership. Suddenly, we’re not all about business but people, no longer trusting business to look after the people. It will be a most interesting experiment studied world-wide.

 

 

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