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Raising the Minimum Wage in Alberta Likely Won’t End Civilization As We Know It

Let's get real about paying people a decent wage.
June 5, 2015, 6:15pm

Protesters marching with the Fight for $15 movement in the US. Photo via Fight for $15 Facebook

Tens of thousands of workers laid off. Hundreds of adorable independent cafes closed. A rapid diaspora from the homeland as grocery stores are picked over for scraps of beef jerky and bridges collapse into rivers tainted by gallons of unnamable bodily fluids.

All of these things will happen if the minimum wage is raised.

At least, that was the gist of the fallout that occurred following Alberta Premier Rachel Notley's reiteration that the NDP would be fulfilling its campaign pledge to raise the province's minimum wage to $15-per-hour by 2018 (it's currently at $10.20 for most workers, and $9.20 for employees who serve alcohol). The Canadian Federation of Business wildly predicted that "between 53,500 and 195,000 jobs would be lost"—which seems like a rather extreme range—if the NDP does indeed decide to mandate that people should be paid enough to survive.

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"There's a lot of disinformation out there," acknowledges Ian Hussey, research manager at the left-leaning Parkland Institute and author of a recent essay for the think tank on the subject.

Canada kind of blows at dealing with poverty; while there's indeed a great deal of prosperity kicking around, it's very unevenly divided. Anti-poverty advocates suggest increasing the take of minimum wage earners (7.6 percent of Canadian employees, and a mere 2.2 percent of Albertan workers) would assist in resolving that issue while simultaneously stimulating local economies: "All the money they make they end up spending," Hussey says.

Critics suggest such a move incentivizes businesses to slash jobs, downsize businesses, and hire a fleet of iPads. Such allegations inspired Jordan Brennan and Jim Stanford, two economists from Unifor, to conduct a study for the Canadian Centre for Policy Alternatives to assess the validity of such claims based on the past 30 years of Canadian data. In short, they found that in 90 percent of cases, there was no statistically significant relationship between minimum wage increases and employment levels. In half of the remaining situations, employment actually received a boost.

"Workers who are paid more report higher job satisfaction," Brennan says. "There's less turnover and less absenteeism, which means less retraining. Ironically, there's a greater efficiency to paying more workers more: it reduces the cost businesses face which offsets some of the increase in the minimum wage."

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If Alberta does go all the way to $15, it will become the first province in Canada to do so and only the fifth jurisdiction in North America (Seattle and Los Angeles both recently ceded to the demands of the Fight for $15 movement). Such a high benchmark has never been tried out before. As a result, few are expecting the NDP to spike the wage overnight: there's a lot riding on Alberta's leftist experiment and sabotaging small businesses or triggering hyperinflation wouldn't do much for their business-friendly image.

In recent weeks, the mayors of Calgary and Edmonton have combined forces to call upon the NDP to also introduce a guaranteed minimum income. It's a distinct concept from the minimum wage: the basic income is funded by the state and ensures every citizen a set allowance, while the minimum wage is obviously paid by businesses. If paired with a minimum wage increase in a reasonable way, the basic income could significantly improve the lives of Alberta's poorest and set an example for the rest of the country, according to advocates.

Franco Savoia, executive director of the anti-poverty organization Vibrant Communities Calgary, says: "If we don't provide adequately—and by that we don't just mean $350 for rent when the rent is $800—it can become a very, very vicious cycle. It's been anathema in the Canadian scene to think about some form of guaranteed income, but that would go a long, long way to improving quality of life."

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The list of people who have historically supported a basic minimum income is long and diverse, including the likes of Milton Friedman and Martin Luther King, Jr. Timothy Ellis, an advocate with the Basic Income Canada Network (BICN), notes that India and Namibia have experimented with it. The Liberals and Green Party have also backed the idea. Such an initiative could help reverse the ongoing decline in real wages for low-income earners and consolidate social programs.

"The economic trend lines are not good in a lot of ways," Ellis says. "Look at automation and outsourcing: the value of labour on the market is decreasing for a lot of reasons. Systemically, that's not a bad thing. Expenses going down are good for the consumer. But, of course, there's some human costs to that."

The Alberta NDP has announced the first minimum wage increase will take place on Oct. 1 following a summer of consultations. Until then, Alberta will be tied with Saskatchewan for the lowest pre-tax minimum wage of all the provinces. Over 20 percent of Alberta's workers earn less than $15 an hour, with over three-quarters of those over the age of 20. Alberta also sports the highest household debt and wealth inequality in the country.

"Business has had its way for three decades," Brennan says. "We find ourselves with stagnant growth and soaring inequality. To recommend more of this as the antidote seems to me, frankly, crazy. I think we need a new direction."

Follow James Wilt on Twitter.