Smithson: Minimum wage increase: Too much, too soon or too little, too late

Few things seem to stir the pot in B.C. as does discussion about raising the minimum wage rate.

Few things seem to stir the pot in B.C. as does discussion about raising the minimum wage rate.

Now, it’s much more than a discussion as B.C.’s new premier has instituted a graduated raise in the minimum wage from $8 per hour to $10.25.

I’ve read reviews of this long-awaited increase which variously describe it as “too much, too soon” and “too little, too late.”

That shows just how polarized parts of the business community and the labour movement are on this topic.

Since 2001, B.C.’s minimum wage rate has sat at the $8 per hour level.

Until Premier Christy Clark’s initiative, that level placed B.C. minimum wage workers at the bottom of the heap.

Nunuvut leads the way with an $11 per hour minimum rate and Ontario and Newfoundland and Labrador followed at $10.25 and $10 respectively.

B.C.’s closest competitor for last place on the list was Alberta at $8.80. That’s hardly auspicious company. But now, B.C. will leap far up the list.

On May 1, 2011, B.C.’s rate will increase to $8.75 per hour. It will go to $9.50 on Nov. 1, and to $10.25 on May 1, 2012.

Workers who serve alcohol will have their very own, lower, minimum wage. Their graduated increases will be to $8.50, $8.75, and $9.

This is sure to be a controversial aspect of the government’s plan and presumably is based on the premise that tips increase their gross wages.

Another controversial aspect of B.C.’s minimum wage rate, the so-called “training wage” of $6 per hour will be eliminated.

Labour groups have clamoured for years for a substantial increase in the minimum wage rate.

They will surely be pleased, if not content, with B.C.’s upcoming increases.

Business groups, particularly those recently affected by the introduction of the HST, will surely be unhappy.

One possible negative impact of the increases is the possible cascade effect on other, non-minimum wage workers, who may seek similar wage bumps.

In addition, recent studies indicate that across-the-board wage increases actually lead to job losses.

The Canadian Federation of Independent Business has concluded, based on Statistics Canada data, that job losses in the form of hiring freezes, slower employment growth, and direct job cuts result from broad-based increases.

Across Canada, approximately 5.4 per cent of workers are at the minimum wage level. Statistics indicate that only 2.3 per cent of workers in B.C. are at that level.

So, a fairly small portion of the workforce is directly affected by a change to the minimum wage.

However, an increase in the minimum wage can have a domino effect on workers who have enjoyed higher wage rates.

Whenever such an increase is announced, labour groups will compare the new rate to the so-called “living wage” for the purpose of showing that the higher rate isn’t enough.

There is some logic to that position but ultimately the reality is that statutory minimum wage levels will probably never reach the living wage threshold.

Business and labour leaders will likely never agree on this issue. For one, B.C.’s new minimum wage is too much, too soon and for the other it is too little, too late.

Robert Smithson is a labour and employment lawyer, and operates Smithson Employment Law in Kelowna. This subject matter is provided for general informational purposes only and is not intended as legal advice.

 

www.smithsonlaw.ca.

 

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