2010 Jun Speaking Notes - Presentation to Alberta Legislative Assembly Standing Committee on the Economy - Minimum Wage

Good afternoon. My name is Gil McGowan and I'm president of the Alberta Federation of Labour.

As most of you know, the AFL is Alberta's largest labour organization, representing 29 unions in the public and private sectors with a collective membership of about 140,000 Albertans.

On behalf of that membership I'd like to thank you for this opportunity to present to this committee on the important question of how to set Alberta's minimum wage.

I've often been described in the media as one of the government's most vocal and persistent critics.

I'm the first to admit there's a lot of truth in that label.

On behalf of my members, I've raised concerns about this government's approach to workplace health and safety; its approach to labour law; its approach to temporary foreign workers; and its approach to development in the oil sands... among many other things.

So you can imagine my surprise when, two years ago, I found myself in agreement with a major decision made by the Premier and his then Minister of Employment, Hector Goudreau.

And I didn't just agree...I actually wanted to shout my enthusiastic support from the roof tops.

The decision I'm referring to, of course, was the decision to increase the minimum wage - and even more importantly - to explicitly tie future increases to changes in the average weekly wage index.

At the time, the premier and the minister basically said that whenever other Albertans got a raise, the lowest paid Albertans should get a raise too.

It was the same logic - and the same mechanism - that the government used to determine pay increases for MLAs.

I had a few quibbles. I thought the starting base wage should be set a little higher. And I thought the Alberta Consumer Price Index might have provided a more appropriate benchmark.

But, on balance, I felt the government had done the right thing for the right reasons. It was a simple system; a transparent system; a predictable system; and a fair system. It was, I would argue, an example of public policy at its thoughtful best.

I'm a strong believer in giving credit where credit is due, so I wasn't shy about praising the government. I did it in writing; I did it press releases and I said it to anyone who would listen.

Whole-heartedly supporting the Alberta government on a major policy issue was uncharted territory for me - but honestly, it felt good.

Unfortunately, today find myself in more familiar territory.

We're here because the new Minister of Employment, Thomas Lukazuk, has called for a review of Alberta's Minimum Wage policy and has suspended the small increase that was supposed to be given to minimum wage workers this spring.

To say that I'm disappointed by this turn of events would be an understatement.

When the Minister made his announcement about the freeze and the review, he said he was doing so because many employers had told him that an increases in the minimum wage, however small, would lead to significant job loss.

That's really why we're here today - because business owners - especially business owner in the service sector - played the jobs card ... and they did it during a recession.

To be fair, anyone sitting in the Employment Minister's chair, has to take concerns about job loss seriously - especially at a time when the number of unemployed is increasing.

But if you're a business or a business lobby group that is asking the government to take money out of the pockets of our poorest citizens, then the onus is on you to back up your arguments with facts, not fear.

Anecdotes aren't evidence and rhetoric is not reality.

But that's what this review is based on: unsubstantiated anecdotes; overheated rhetoric; and thinly disguised self interest.

I say all of this because when it comes to the argument that is at the core of this debate - the argument that even a small increase in the minimum wage would kill jobs - there is no evidence.

In fact, what the evidence shows is exactly the opposite. What the evidence shows is that employment in the low-wage service sector has actually INCREASED in Alberta whenever we've increased the minimum wage.

The Alberta Federation of Labour has conducted an five-year analysis of the occupations most likely to pay minimum or low wages - occupations in retail sales, cashiers and clerks, food and beverage service workers, and those employed in travel and accommodation.

Since 2005, Alberta has made four upward adjustments in the minimum wage...and every time the number of Albertans working in low wage jobs went up.

In 2005, the minimum wage was boosted from $5.90 to $7.00/hour. One year after the increase, there were 26,700 more Albertans working in the food and beverage, service, and travel/accommodation industries.

In September 2007, the Alberta government boosted the minimum wage from $7.00 to $8.00/hour. In April 2008, they increased it again to $8.40/hour. In the 8-month interval between these increases - and just as the global credit crisis was beginning to shake business and consumer confidence - the number of Albertans working in the food and beverage, retail, and travel/accommodation industries grew from a total of 342,800 to 363,300 employees.

Finally, in April 2009, the minimum wage increased again - from $8.40 to $8.80 per hour.

Around this time overall unemployment in Alberta had increased from 6% in April 2009 to 7.4% in May 2010. If increases in the minimum wage really killed jobs, you'd think surely at this time, when other jobs were being shed, this would happen. But it didn't.

  • Employment in food and beverage service, retail sales, and travel/accommodations actually grew in the year since the last minimum wage increase.
  • Albertans employed in retail sales as clerks and cashiers grew from 129,600 in April 2009 to 142,400 individuals in May 2010
  • Albertans working in food and beverage service went from 64,700 in April 2009 to 68,700 in May 2010
  • Albertans working in travel and accommodation services grew from 185,800 in April 2009 to 188,400 individuals in May 2010.

So why have all the conservative predictions about job loss related to minimum wage turned out to be empty phantoms. Partly because they we motivated more by the self-interested desire by some employers to keep wages low. But more importantly, those predictions were wrong because they were based on economic models as opposed to empirical evidence.

Models only work if the assumptions that they're based on a true ... that's why they're dangerous tools to rely on for policy making. Empirical evidence, on the other hand, is by definition true ... it's reality. And reality, not ideologically driven conjecture, should be the basis of all public policy - especially those policies that affect our most vulnerable citizens.

What the empirical evidence from right here in Alberta shows is that there is no substance to the argument that modest, predictable increases in the minimum wage kill jobs. It's a myth, plain an simply.

Unfortunately, it's not the only myth that has been clouding the debate on minimum wage.

For example, there's the minimum wage is a living wage. It's not.


An Albertan earning the minimum wage of $8.80/hour, working 40 hours per week and 50 weeks per year earns $17,600 per year before taxes, which is $4,533 below the before-tax Low-Income Cut-Off for an individual living in a city, better known as the poverty line.

If one is the head of a lone-parent family with two children in Edmonton or Calgary, a full-time hourly wage of $10/hour - the wage earned by 6.9% of working Albertans - still sees that family earning $13,133 per year less than the before-tax Low-Income Cut-Off.

Another myth has to do with the number of Albertans who struggle with low wages. Some people in government and business fond of reminding Albertans that very few workers earn minimum wage - as if this is a justification for keeping the minimum wage far below any accepted measure of poverty.

While it is true that only 1.4% of Alberta workers earn the bare minimum, fully 6.9% of the Alberta workforce earns less than $10/hour and 13.7% earned less than $12/hour, a wage that still constitutes a life of poverty.

The minimum wage is a floor. If the floor is too low, all workers at the lower end of the income ladder suffer... they're dragged down. That's why the minimum wage matters, even if only a small number of workers actually earn that wage.

Another myth is that low-wage earners are predominantly high school students living with their parents, who only work to pay for the latest video game or new cell phone.

This stereotype is an insult to the tens of thousands of Albertans - predominantly women - who are working for low wages in order to put food on the table.

59% of low-wage earners (less than $10/hour) are over 20, and 42% are over 25.

In other words, 42% of low-wage earners are likely to have family responsibilities.

The final myth that I want to address is the myth that Alberta is doing enough for its poor, especially its working poor.

In his letter of invitation for groups to present to this review, Minister of Employment and Immigration Thomas Lukaszuk urged the Standing Committee on the Economy to examine practices in other jurisdictions.

Minimum wage standards are part of an overall strategy to combat poverty and ensure economic security for all Albertans.

However, Alberta is in a minority of provinces without some form of anti-poverty strategy. For example:

  • New Brunswick, Nova Scotia, Ontario and Manitoba all have comprehensive anti-poverty strategies, and part of the strategy in all of these provinces is ensuring the minimum wage keeps pace with the economy.
  • 6 out of 10 provinces have provincial child benefits similar to the federal Child Tax Benefit, which supplement incomes for families headed by low-wage earners. Alberta is in the minority of provinces without a provincial child benefit.

So what conclusions can be drawn from all of this?

The main conclusion, I think, is that Alberta can and should do better. The other main conclusion is that Alberta can and should base its policy on minimum wage on facts and empirical evidence, not hearsay, rhetoric and self-interested fear-mongering.

And what do the facts tell us?

They tell us that too many working Albertans are suffering with low wages.

They tell us that regular, predictable increases to the minimum wage would help those struggling Albertans.

And they tell us that increases in the minimum wage have not in the pass and will not likely in the future result in the loss of jobs.

The bottom line for us is that Alberta can afford to be a leader in fighting poverty - and any serious strategy to fighting poverty has to include a regularly indexed minimum wage that is at least close to being a living wage.

We believe that anyone who works full-time, full-year in our province should earn a wage that allows them to stay out of poverty. The current minimum wage doesn't do that - and without a system for guaranteeing regular increases, the situation will only get worse as the value of the minimum wage is eroded by inflation.

The Alberta Federation of Labour applauded the government's 2007 decision to tie increases in the minimum wage to the average weekly earnings index.

We recommend that the government return immediately to following its own policy, and boost the minimum wage immediately to $9.05, as it was supposed to happen earlier this year.

In addition, as the economy recovers, the government should consider a one-time boost to the minimum wage in the months ahead.

As we have seen, thousands of Albertans earn less than $10/hour, and many of them are likely to have family responsibilities.

Boosting the minimum wage to $10/hour in the months ahead is unlikely to have any effect on the economy besides giving low-income families a little more breathing room.

Putting more money in the hands of hard-working, low-income people, according to every economic analysis available, actually provides a boost to the economy in times of recession.

As I've said, this is a government that did the right thing for the right reasons on minimum wage. Please do the right thing again. Thank you.

Gil McGowan, President
Alberta Federation of Labour
June 23, 2010

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