Steelcitygrit [in exile]

Ruminating on all things Canadian and political.


Friday, February 02, 2007

$10 minimum wage makes too much sense

It's time for a $10 minimum wage in Ontario. I've struggled with this for some time now, but it's becoming increasingly clear to me that the provincial Liberals ought to swallow their pride and throw their energy behind the NDP motion.

Imagine that, according to research done in 2002, someone has to work nearly full-time hours all year at $10/h just to remain above the poverty line. Of course, minimum wage jobs very rarely offer consistent full-time hours. So even assuming full-time hours all year, which is a rarity in the minimum wage world, we are condemning workers to live no less than 20% under the poverty line. Doesn't that make an $8 minimum wage seem terribly arbitrary, as well as insufficient?

Even more striking is the fact that a household with a single child needs to produce 75 hours of labour a week at $10/h to remain above poverty. This means 94 hours of work a week at only $8. Even if the child does have two parents, they each must somehow produce 47 hours of labour a week. With a child to care for, this is well beyond possible.

Some business Liberals have rejected the notion on impulse. The automatically-generated response is inevitably : 'think of job loss!' A reasonable protestation, but one which research doesn't bear out.

In 2003, about 85 Canadian economists and labour policy experts, including the former chief economist at TD Bank, released a comprehensive report which demonstrated that "Modern economic research has indicated ... the negative employment effects of minimum wages are negligible and can be overwhelmed by the positive impacts of minimum wages on labour force participation and consumer spending." This is the most recent, most comprehensive investigation of the issue, and its conclusions fly in the face of conventional business wisdom.

The same findings are echoed by the OECD, as well as a coalition of 650 US economists - including 5 Nobel Prize winners - who have nearly succesfully wrested a 30% minimum wage increase from Congress.

At worst, some studies have found around a 1-3% rate of job loss roughly corresponding with a 10% increase in minimum wage. However, this job loss is usually associated with teenagers, who have statistically less need for employment.

Another argument is that businesses will relocate if faced with a large hike in the minimum wage. The ludicrous aspect of this argument is that small businesses are supposedly the most affected, and small business don't uproot themselves. Boutiques on Queen East aren't going to up and head for Manitoba. Niether are the big minimum wage employers - fast food restaurants, etc. - going to abandon Canada's most populace province. That's just a bizarre assertion. Look to this case study of Washington State, if you need more convincing. Washington has the highest minimum wage in the US, and has experienced zero economic blowback. Small businesses have flourished and people come from neighbouring states for employment, which has meant Idaho has also had to raise the wage.

Finally is the peculiar distinction that some Liberals make between government programs and labour regulations. The suggestion is that businesses shouldn't be expected to socially responsible, becacuse this is the government's job. The welfare state has always meant a combination of labour regulations and government expenditures. A minimum wage hike is an alternative to extracting tax dollars from businesses then delivering them to the working poor through a vast circuitous bureaucratic network. A wage hike has the same effect, but is more direct, more immediate, more efficient and more logical.

It's easy to dismiss this as pie-in-the-sky NDP politic'n, but it is far more difficult to dismiss the facts. A minimum wage is completely arbitary if it doesn't guarantee against poverty. We can make sure it does that without incurring any serious costs. Indeed, we will be unburdening ourselves of the costs associated with the working poor - housing issues, health issues, etc. Expect more non-Dippers to come on board - starting, I predict, with Art Eggleton. This is a powerfully important issue, and one where partisanship should be put aside.


Blogger UWHabs said...

But instead of hiking the minimum wage, wouldn't it make more sense to try to find ways so that people on the poverty line don't have to take minimum wage jobs, that they can actually get better ones, and leave the ones actually at minimum wage to teens?

It might require a different view on the world, but I find it sad that we have a society where people need the minimum wage jobs just to subside, and not to supplant other incomes.

12:21 PM  

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