Workers trapped in poverty by low minimum wage

Opinion

Hey there, time traveller!
This article was published 06/06/2017 (2124 days ago), so information in it may no longer be current.

Employment should be a route out of poverty, but for some, low wages are a poverty trap. The current minimum wage is inadequate as, at $11/ hour, it places workers as far as $8,000 below the poverty line.

In a video posted by the Progressive Conservative party on Friday, Premier Brian Pallister criticizes minimum wage increases in Ontario and Alberta, saying the change will reduce the number of entry-level jobs in those provinces. Pallister says the Ontario and Alberta governments are “left of centre” and their plans for a $15-an-hour minimum wage will hurt opportunities for young people.

But the premier’s fear mongering is not supported by evidence across Canada.

Minimum wage should be increased through pre-announced steps to $15.53/hour and then indexed at that point. The current plan by the Manitoba government would tie minimum wage increases to the rate of inflation or less, freezing or lowering the buying power of the most vulnerable workers in Manitoba.

Under Bill 33, future minimum wage increases would be set at the rate of the consumer price index (CPI), or in the case of negative economic conditions such as a recession, no increase will be made. This legislation would give workers only a $0.15 increase in minimum wage in 2017.

One way to see the impact this legislation could have on workers is to see how this legislation compares to recent increases in minimum wage.

If Bill 33 had been in place between 1998 and 2016, minimum wage today would be only $7.40, $3.60 lower than it is currently. There is much more catching up to do.

According to Statistics Canada, 38,600 Manitobans work for minimum wage, and 55 per cent are over age 20. More than half work for companies with more than 100 employees and 41 per cent in firms with over 500 employees.

The majority of minimum-wage workers are women, many with children.

Minimum wage also has an impact on all low-wage workers. There are 73,700 Manitobans who earn 10 per cent above minimum wage or less. This represents 18.5 per cent of Manitoba workers.

Who are these workers? People we all rely on every day, such as retail-store workers, building cleaners and food-service workers. Yet these members of our community struggle to make ends meet, which impacts health and well-being.

Researchers have become increasingly aware of the damaging effects that both poverty and low income can have on the mental and physical health of individuals and families. Income is a social determinant of health as it provides for shelter, food, recreation and the ability to participate in society.

Research shows that living in poverty can cause stress and anxiety, which damages health. Low income limits peoples’ choices. People cannot escape poverty while struggling to survive on poverty wages.

The Winnipeg Chamber calls for a strategy to get minimum wage earners into jobs that improve pay; that should be a priority. But to deny an increase to the minimum wage that allows people to live in dignity sentences minimum-wage workers to continue to struggle.

A good proportion of those earning minimum wage are not upwardly mobile: 36 per cent have done so for one to five years and 17 per cent for over five years. No wage earner should have to subsist on subpar wages. The most effective and efficient way to improve substandard wages is to increase minimum wage to a non-poverty rate.

Neither the business community nor Manitobans in general should fear an increase in minimum wage.

If we look over time and across Canada, increasing the minimum wage does not result in job losses.

A Canadian Centre for Policy Alternatives study of all provincial minimum wages and employment changes from 1983 to 2012 found no consistent evidence that minimum wage affects employment levels.

When considering where to locate in Canada, businesses consider many factors, including the cost of inputs (goods, utilities, insurance and labour, etc).

Studies show that minimum wage is not a significant one. In fact, low-wage employers dominate service sectors and must stay close to the consumers who support them.

From an employer perspective, a higher minimum wage results in lower turnover rates.

Economic development relies on consumer spending.

Higher wages feed back into stronger demand and more jobs. Minimum-wage earners spend in the local economy on basic goods and services, which benefits Winnipeg and Manitoba businesses.

Higher wages also improve health and educational outcomes for minimum wage workers and their families. This saves the province money.

The current minimum wage provides a full-time worker with a market income of just $21,450.

The Low Income Cut Off — Before Tax level for 2014 (the most recent year available) was set at $30,286 for a family of two. A single parent with one child, working full-time, would need a wage of at least $15.53/hour to get above the poverty line.

If this legislation is passed, families will continue to have to choose between paying rent or buying food, while stretching a paycheque that does not last till the end of the month.

It will extinguish hopes of owning a home or putting money aside for education or retirement for tens of thousands of Manitoba workers.

The government should instead develop a long-term minimum wage strategy, including planned incremental increases, to raise minimum wage above the poverty level so that all workers can enjoy the benefits of a prosperous Manitoba economy.

Josh Brandon is chair of Make Poverty History Manitoba and Molly McCracken is the director of the Canadian Centre for Policy Alternatives, Manitoba office.