Tories find middle ground with minimum-wage compromise

It’s unlikely the Stefanson government could have landed on a better number when deciding where to set the province’s minimum wage in October.

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Opinion

It’s unlikely the Stefanson government could have landed on a better number when deciding where to set the province’s minimum wage in October.

As predicted, the provincial government has temporarily suspended the inflation-based formula it normally uses to adjust the minimum wage each year. In its place, government will make two adjustments to the base wage that better reflect the real-time inflationary pressures workers are now facing. The hourly rate for Oct. 1 was originally set to rise to $12.35, based on last year’s rate of inflation. Instead, it will jump to $13.50 — a 13 per cent increase over last year, well above Manitoba’s current rate of inflation. There will be another increase April 1, when the base wage rises to $14.15, a 4.8 per cent increase (almost 10 per cent on an annualized basis).

Government’s intention is for the minimum wage to rise to about $15 by Oct. 1, 2023. The exact figure will depend on where inflation lands this year, as the province returns to its indexed formula in 2023. The province is using a six per cent inflation projection for 2022 to estimate the $15 hourly wage ($14.15 plus six per cent). It may be higher. Manitoba’ inflation rate in July was 8.8 per cent, although it’s expected to fall by the end of the year. It was 9.4 per cent in June. If the province’s 2022 inflation rate ends up at seven per cent, for example, the minimum wage will be set at $15.15 an hour Oct. 1, 2023.

It’s probably higher than most employers had hoped for. But it’s within the range most observers were expecting, albeit on the high side.

Predictably, organized labour is unhappy with the decision. The Manitoba Federation of Labour wanted the wage jacked up to $16.15 an hour immediately — an unreasonable demand that would have caused significant financial hardship for many employers, particularly small businesses and not-for-profits.

“It is unfortunate that the Stefanson government has decided to side with what employers lobbied for instead of what working families need,” the MFL said in a release.

The Tories didn’t side with anyone. They found a middle ground, as governments usually do when it comes to the minimum wage. Unions want a higher base wage, in part, because it allows them to demand higher wages in collective bargaining; employers want a lower rate to keep operating costs as low as possible. Those competing demands have existed for decades.

What government chose was a fair compromise. For workers, it far exceeds inflation and provides them with much-needed cash to help cushion the blow from soaring prices. It will be a burden for many employers, especially those still recovering from the COVID-19 pandemic. However, the province is also pledging to provide employers with financial support to help offset the additional labour costs.

There is no perfect solution; this was probably the best option available. Manitoba will no longer have the lowest minimum wage in the country (it will be second-last in October and middle of the pack by April, depending what other provinces do) and workers will get a reasonably generous increase in their paycheques.

There is a downside: the wage increase is inflationary. Higher hourly rates will undoubtedly force some employers to raise prices to offset costs. That is the economic conundrum of rising inflation. When prices rise, workers demand higher wages, and higher wages force employers to raise prices further. It’s a vicious cycle. There are no simple solutions.

When prices rise, workers demand higher wages, and higher wages force employers to raise prices further. It’s a vicious cycle.

The Opposition NDP says the minimum wage should rise immediately to $15 an hour. Party leader Wab Kinew claims by failing to reach that level, the province is forcing people on minimum wage to live in poverty. The reality is, there isn’t much of a gap between what government is proposing and what the opposition is demanding. Under the NDP’s plan, a $15 hourly wage today would be less than $16 an hour by Oct. 1, 2023, adjusted for inflation. Under the Tories’ plan, it will likely be just over $15. It’s not much of a wedge issue.

When Manitobans go to the polls in next year’s provincial election, slated for October 2023, the minimum wage will be more than 25 per cent higher than it is today. It’s tough to find much fault in that, even for critics of the government.

tom.brodbeck@freepress.mb.ca

Tom Brodbeck

Tom Brodbeck
Columnist

Tom has been covering Manitoba politics since the early 1990s and joined the Winnipeg Free Press news team in 2019.

History

Updated on Thursday, August 18, 2022 8:00 PM CDT: Nova Scotia’s minimum wage will be $13.60 on October 1.

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