Commentary

The Province’s Working Poor Deserve a Minimum Wage of $15 an Hour

image: Mark Leger/Huddle

If the Atlantic Institute for Market Studies (AIMS) has its way, minimum wage earners in New Brunswick will be waiting a long time before they see an increase.

According to the Halifax-based think tank, modestly self described on its website as “one of the most highly regarded think tanks in North America” (their award-winning track record is “a feat unprecedented in the world”), minimum wage earners should eschew rate increases in favour of government action that would decrease the cost of living and increase the purchasing power of the existing wage. In particular AIMS wants government to: remove trade barriers, phase out the national supply management system and reduce payroll taxes.

RELATED: There Are Better Ways to Help Low-Income Earners than Raise the Minimum Wage

This predictable neoliberal prescription is unlikely to produce any immediate (or intermediate) relief to the 6.6 percent of wage-earners in the province who work for $11 an hour. Over the last 10 years the percentage of N.B. workers earning the minimum wage has increased by almost 60 percent, from 4.2 percent to 6.6 percent.

Based on a 40-hour work week, a full-time minimum-wage worker would earn $440 a week, or $22,880 annually. That’s slightly above the 2014 Low Income Measure (before tax) poverty line of $20,137. Add a dependent and our full-time worker’s family is now living in income poverty.

According to the most recent Taxfiler data (2014), the rate of income poverty for the province is 14.5 percent. In the city of Saint John the overall rate is 19.7 percent;  the rate of child poverty is 30.8 percent, a stubborn rate that has actually increased from 28.9 percent 10 years ago.

A more startling figure on the state of low-income earners in the province is the data reported by economist Armine Yalnizyan in the June 2 issue of Macleans.

According to Statistics Canada tabulations, more than a third of N.B.’s labour market (34.2 percent) earns less than $15 an hour. (Only the Atlantic provinces had more than 30 percent of their workers earning less than $15 an hour – from a low of 31.7 percent in Newfoundland & Labrador to a high of 36.7 percent in Prince Edward Island.)

It will take more than the end of dairy subsidies or a reduction in employers’ EI, CPP or Workers’ Compensation rates to see a marked improvement in how far the pay-cheques of working poor New Brunswickers can be stretched.

The minimum wage debate is polarized. On one hand, there are those that claim that increasing legislated minimum wages will force many employers to reduce staff hours, lay off employees or close their doors.

On the other hand there are those who advocate (AIMS prefers “agitate”) for wages that take into account rising inequality and the real costs of meeting basic needs like shelter and food.

Each side is able to cite studies and research which offer some support for their position, although there is a growing body of work that challenges the assumption that higher wage rates lead to substantial job loss.

It’s not hard to feel some sympathy for owners of small businesses (or managers of many non-profit organizations) who would face some difficult choices with increased minimum wages. But a lot of minimum wage earners in New Brunswick – 48 percent of them according to Yalnizan – work for employers with more than 500 employees.

And it’s not just young people who are working for the minimum wage. While the government’s profile of minimum wage earners confirms that young people 15-24 continue to make up the majority of minimum wage earners (53.5 percent in 2015), the percentage of workers in the over 55 category earning minimum wage jumped almost 5 points between 2006 and 2015, from 9.3 to 14.1.

Provinces, U.S. states move toward $15 minimum wage

Two provinces are showing leadership on increasing the minimum wage. Alberta will increase its minimum wage to $15 by 2018 and last month Ontario announced a plan to increase the provincial minimum wage to $15 an hour by 2019.

Momentum for a $15 minimum wage is growing in the U.S. too. Fast food workers launched the Fight for $15 in 2012, and by early 2016, cities and states representing 18 percent of the U.S. workforce had approved $15 minimum wages.

The New Brunswick government has stated that the $11 minimum wage will be indexed to the inflation rate starting sometime next year, presumably in April when the three Maritime provinces have agreed that any increases should take place. It’s time to commit to a path to $15.

AIMS does have a point, though. There are other ways of helping low-income earners. Increasing the purchasing power of an existing wage is a worthy ambition. And there are government initiatives that could improve the economic circumstances of the working poor by decreasing their costs.

Need other supports like prescription drug programs

We could start with an affordable prescription drug program. About 20 per cent of New Brunswickers do not have coverage. This represents about 70,000 families (150,000 individuals) that cannot access the best and most cost-effective treatment for many conditions. An affordable program could help people manage chronic diseases. It would provide savings to the individual and the health system.

The government could also ensure that the payday industry that is about to be regulated in New Brunswick contains favourable repeat borrowing provisions found in Alberta, British Columbia, Ontario and recommended in Nova Scotia. The debt cycle created by chronic repeat borrowing is an unnecessary hardship for many workers. New Brunswick is poised to be the eighth province to regulate the industry and it should learn from other provinces and lead the country in consumer protection.

It’s indisputable that government programs can make life more affordable for low-income workers. But they can’t take the place of healthy employment earnings. The working poor in New Brunswick need a wage increase. They can’t wait for the AIMS prescription.

Randy Hatfield is the Executive Director of the Saint John Human Development Council. These commentaries do not necessarily reflect the opinion of Huddle.