Raising minimum wage a dilemna

The Alberta Federation of Labour thinks the province's minimum wage is too low, and it wants Alberta Employment and Immigration Minister Thomas Lukaszuk to do something about that before he steps down to seek the Conservative party leadership.

"Lukaszuk's first act when he became minister a year and a half ago was to freeze Alberta's minimum wage," AFL president Gil McGowan said in a news release last week. "At the time, he said he would review the practice of automatically indexing the minimum wage and only consider an increase when the provincial economy returned to health. Well, the review is done and the recession is over. It's time for the minister to live up to the promise he made to Alberta's poorest workers."

Alberta's minimum wage sits at $8.80 per hour, lower than all other Canadian provinces and territories with the exception of British Columbia's $8.75. But with B.C. planning to increase its rate to $9.50 in November, then to $10.25 per hour in May 2012, that will leave Alberta trailing the field unless the minimum wage is raised in this province.

In other provinces, the minimum wage ranges from $9 in Prince Edward Island and the Yukon to $11 in Nunavut and $10.25 in Ontario. Elsewhere on the Prairies, the minimum wage is $9.25 in Saskatchewan and $9.50 in Manitoba.

At $8.80 per hour, full-time hourly minimum-wage workers in Alberta earn $352 a week and approximately $18,304 per year, based on eight-hour days and a 260-day work year, according to the Canadian Minimum Wage website. That would put a single person earning minimum wage in Lethbridge barely above the "low-income cut-off" line of $18,147 per year, as calculated by the Canadian Council on Social Development (2006 figures).

McGowan says with an improved economy and with thousands of high school students set to join the job market for the summer, now is a good time to bump up Alberta's minimum wage.

But there are two sides to that coin. Critics of a higher minimum wage say it leads to job losses. When B.C. announced its plans to hike its minimum wage, a report from the Fraser Institute predicted the increase will result in between 9,000 and 52,000 job cuts.

A report released this year by the Canadian Federation of Independent Business titled "Minimum Wage: Reframing the Debate" noted, "Although governments have implemented minimum wage policies in hopes of reducing poverty and improving the well-being of low-income workers, the overall effectiveness of these policies is debatable."

The report went on to estimate that a 10 per cent increase in the minimum wage across all provinces "costs between 92,300 and 321,300 jobs."

That means while an increase in the minimum wage means more money in the pockets of those at the low end of the wage scale, it also means a number of workers wind up with their income reduced to zero.

Clearly, the issue creates a dilemma. On the surface, it seems a no-brainer that workers deserve a better minimum wage. But it's also true that many small businesses aren't in a position to boost their payroll budget. If payroll goes up, so do other associated costs such as payroll taxes including Canada Pension Plan, Employment Insurance and Workers' Compensation contributions, the CFIB notes in its report.

Consequently, if the minimum wage goes up, something has to give - and that often means people losing their jobs.

So the question boils down to: Is it worth it to raise the minimum wage and improve the lot of some workers while making things worse for others?

There's no easy answer.

Lethbridge Herald Opinion, Thurs May 26 2011

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