Workers at an Ontario rally in 2015 echo a movement begun in the US for a $15 minimum wage.

Workers at an Ontario rally in 2015 echo a movement begun in the US for a $15 minimum wage.
Photo Credit: CBC

Raising the minimum wage in Canada- good idea?

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It seems that the price of everything is going up and up: increasing taxes, service fees, housing, food, clothing and just about everything and anything.

There are increasing calls for the provincially controlled minimum wage to increase to help those on the lowest margins of working Canadians.

Alberta for example increased its minimum wage for most hourly paid employees to $11.20 on Oct.1, 2015. It intends to follow the calls in the U.S. for a hike to $15 which the province intends to reach by 2018.  Ontario, Canada’s most populous province, raised their minimum hourly wage also on Oct 1, 2015, to $11.25  Each province controls its own rate.

The Vancouver-based Fraser Institute, a conservative leaning public policy think tank, released a report today saying, increasing minimum wage is not the best way to help low-income earners.

Ben Eisen is associate director of Provincial Prosperity Studies at the Fraser Institute and I reached him in Toronto.

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Ben Eisen, Associate Director, Provincial Prosperity Studies, Fraser Institute
Ben Eisen, Associate Director, Provincial Prosperity Studies, Fraser Institute © Fraser Insitute

The report is called Raising the Minimum Wage: Misguided Policy, Unintended Consequences

It says that statistics show that the majority of minimum wage earners, 80%, do not live in low income houses. It suggests that in many cases these are teenagers or young adults working a first job while still living at home and are not the marginalized low income earners that a pay raise would help.

According to the Fraser report, an increase in the minimum wage makes it harder for employers to hire workers and that leads to a decrease in the number of jobs available. Eisen says that Canadian research shows that a ten percent increase in minimum wage tends to decrease employment for teens and young adults by three to six percent.

The Fraser report suggests that the federal “Working Income Tax Benefit” is the better way to actually target the working poor who need a financial boost.

Although it says the WITB is not without flaws, the Fraser Institute says it targets the desired individuals more accurately channelling resources to  low-income households while avoiding price controls. It adds the WITB is “designed to minimize the disincentives that can occur when government assistance is removed at higher income levels”.

The Fraser Insitute says raising the minimum wage actually misses the intended target of working poor as most are teens working a first job but living at home
The Fraser Insitute says raising the minimum wage actually misses the intended target of working poor as most are teens working a first job but living at home © Fraser Institute

A 2015 report by the CBC noted that in March 2015, 30,000 jobs were created in Canada, but that most were  only part-time.  The story detailed the situation for someone who did not fit the Fraser’s quoted statistic of a majority of teens working at low income jobs.  It told of a 40 –year-old woman with a ten year old child who had to move back in with her parents and who works at three part-time jobs, and has trouble making ends meet with low-income and part-time positions.

A 2015 report by the CBC noted that in March of that year, 30,000 jobs were created in Canada, but that most were only part-time.  The story detailed the situation for someone who did not fit the Fraser’s quoted statistic of a majority of teens working at low income jobs.

It told of a 40 –year-old woman with a ten year old child who had to move back in with her parents, who works at three part-time jobs, and has trouble making ends meet with these low-income and part-time positions.

Another person in the report said who had been working at minimum wage for four years with no raise said, it’s not living, it’s just surviving. The woman depends of food banks, walks to save bus fare, and from Friday morning to Sunday night she works 48 hours. She also noted that many Canadians were concerned about the poor working conditions for garment workers in Bangladesh, but ignore the very real hardships of many of the approximately 2-million temporary workers in Canada.

Additional information-sources

http://www.cbc.ca/news/business/secure-jobs-in-short-supply-in-canada-s-new-tough-labour-market-1.3050449

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