It’s time to put an end to the fact that the wealthiest province in the country has the lowest minimum wage, says a western public-policy research institute.
Calling Alberta’s minimum wage a disgrace and an embarrassment, the Calgary-based Canada West Foundation (CWF) is calling on the Klein government to increase the rate by about 10 per cent.
That would move the wage from its current level of $5.90 an hour to $6.50 and position Alberta ahead of Newfoundland and Prince Edward Island, place it on a par with Nova Scotia and New Brunswick, yet still leave it behind the rest of the country.
“It’s not as if everyone is wealthy in this province and driving BMWs,” says CWF chief economist Todd Hirsch.
“Raising the minimum wage by 10 per cent won’t make a difference. Even raising it to $7 or $8 probably will not have a big effect on the labour market. We’re not talking about the sky falling, it’s a small segment of the labour market.”
According to provincial government figures, less than one per cent of the workforce earns the minimum wage.
But in a province that is expected to be rolling in billion-dollar surpluses now that the debt is about to be retired, something needs to be done to help those who earn the minimum hourly pay rate, says the CWF, an independent non-profit institute dedicated to introducing western perspectives into Canadian policy debates.
Hirsch notes that the working poor in Alberta can barely scrape together a damage deposit, homelessness is rising and children continue to go to school hungry.
While raising the minimum wage cannot possibly solve these problems, Hirsch said it would be a symbolic place to start.
The province’s minimum wage, which was last raised in two stages – from $5.25 to $5.65 an hour on Oct. 1, 1998, and to $5.90 on April 1, 1999 – has since remained unchanged.
However, the Canadian Federation of Independent Business (CFIB), which represents 9,200 small and medium-sized businesses in Alberta, says raising the minimum wage should not be on the table.
It points to the small number of people currently earning minimum wage and says its research shows the vast majority are students or people using it as a secondary family income.
Also, says Corrine Pohlmann, the CFIB’s director for provincial affairs for Alberta and the N.W.T., the minimum wage is employed as a training tool, which employers utilize as a training wage before moving workers to higher pay scales.
“We want it to stay where it is. We believe market forces are the best arbiter of wages in Alberta,” says Pohlmann. “There are so few people on it, it is not a relevant gauge of wages in Alberta and it doesn’t need to be changed.”
Echoing the call to raise the minimum wage is the provincial Liberal party.
Opposition labour critic Hugh MacDonald, MLA for Edmonton Gold Bar, wants the province to go even further by boosting the rate by $1.10 an hour to $7 effective Jan. 1, 2005, in addition to having that number reviewed annually.
“If the compensation for all MLAs is reviewed annually, certainly all those earning the minimum wage should have theirs reviewed annually,” says MacDonald, who adds that low wage earners in Alberta can no longer afford to live on $5.90 an hour.
“The government has no interest in the issues and concerns of Albertans making the minimum wage,” says MacDonald. “They’ve forgotten about the poor and they’ve forgotten what it’s like. They spend more at lunch than some of these people would earn in a day.”
These people need and deserve an increase so that they, too, can share in the prosperity. It’s only fair.”
But Clint Dunford, minister of Alberta Human Resources and Employment, counters that while the province is comfortable with having a minimum wage, it shouldn’t interfere with market forces.
“I focus more on the employment rates than the minimum wage,” Dunford says.
“I’ve seen statistics across the country that show a trend: The higher the minimum wage, the higher the unemployment, especially among the 15 to 24 age group.”
Alberta’s unemployment numbers currently show the province has the second-lowest unemployment rate at 5.1 per cent – Manitoba is at five per cent – and the lowest youth unemployment rate at 9.3 per cent.
“Minimum wage is a government intrusion into the market. It’s my belief that if you let the markets work, they will work. You don’t let them enslave anybody, you just stand aside and let them work,” says Dunford.
The minister adds that to make sure national and multinational companies aren’t taking advantage of Alberta’s low rate, he looked into the situation.
“I wanted to find out how they were treating Alberta workers compared to the other provinces. When we talked to them, we found they said they had to compete in the marketplace and their starting market rate was higher in Alberta than the other provinces, except B.C. So that allayed my fears that workers here would be taken advantage of,” says Dunford.
As to whether the government would or should raise the rate, Dunford says no formal review process is currently under way, but attention is being paid to the letters they receive and the advice people provide.
Dunford expects Alberta will eventually review the minimum wage, though it is extremely unlikely to happen in the next couple of months.
The CWF’s Hirsch says he understands the economic premise that a higher minimum wage could mean employers would hire fewer people in order to reduce their costs, while also trying to squeeze extra productivity out of their remaining employees.
“It’s a sound economic argument and as an economist I believe it to be true,” Hirsch writes in a recent CWF economic update. He points out that it’s also important to reflect on the bigger picture.
Alberta’s economic problem now is hardly unemployment, he says.
The minimum wage ranges in other provinces from $6 in Newfoundland to $8 in B.C. The N.W.T. and Nunavut are higher yet ($8.25 and $8.50, respectively) due to the high cost of living, Hirsch notes.
“But in Alberta – where the living costs are far from the lowest in the country – the government has decided $5.90 an hour is enough to live on,” he writes.
Dunford notes his office receives many letters from people “who claim to be working at minimum wage.”
“My answer to them is that if they’ve been working at the minimum wage for more than three to four months, in their off-hours they need to be knocking on other doors,” he says.
“There are plenty of jobs out there. There’s no reason, in my mind, to be trapped at the minimum wage.”
(Laura Severs can be reached at firstname.lastname@example.org)