On October 1st, the minimum wage went up in Alberta, Saskatchewan, Ontario and Prince Edward Island. It was Alberta's increase that caused a lot of howling. Alan Freeman writes:
Following through on an election promise, the NDP government there is raising the minimum wage to $15 an hour by late 2018 on an incremental basis. This week’s raise to $12.20 amounted to a rise of $1, or more than 8 per cent over the previous level, and leaves Alberta with the highest provincial rate. (Nunavut, at $13, is higher still.)
The business lobby -- predictably -- was apoplectic:
Restaurants Canada, the industry lobby, claimed that 78 per cent of its members in the province would cut hours and 50 per cent would lay off workers, based on a survey of members.
Express Employment Professionals, a temporary help agency, said a 10 per cent increase in the minimum wage could cut national employment of minimum-wage workers by up to 20 per cent.
The Canadian Federation of Independent Business (CFIB) claims that the $12.20 hourly wage could lead to up to 50,000 job losses in the province. That’s quite the alarming prediction, since there are only 60,000 workers currently earning minimum wage in Alberta.
And the CFIB, always looking out for the best interests of low-wage employees, also warned ominously that once the minimum wage goes up to $15 in Alberta, a full-time worker at that rate will have to pay $700 a year in additional provincial taxes.
Recent studies indicate that raising the minimum wage doesn't bring on Economic Armageddon:
In an oft-cited U.S. study, Princeton University economist Alan Krueger looked at the impact on fast-food employment of the 1992 increase in the minimum wage in New Jersey. He conducted a telephone survey of fast-food outlets in the state and in neighbouring Pennsylvania, where the minimum wage was unchanged, before and after the wage hike in New Jersey. He found no discernible difference in employment in both states.
John Schmitt, an economist with the Center for Economic and Policy Research in the U.S., sought to explain why modest increases in the minimum wage have little impact on employment. Surveying a raft of studies, he found that employers can opt for alternatives that don’t necessarily mean layoffs. They can raise prices. They can cut hours. They can reduce pay or bonuses for higher-paid employees or managers. They can also take measures to improve productivity by using labour-saving devices or insisting on better performance from employees. Or they can accept lower profits.
Schmitt adds that employers also can benefit from a minimum wage spike — because when wages go up, employee turnover declines. Better-paid employees are more loyal employees. Lower turnover leads to a reduction in training costs.
Henry Ford proved a hundred years ago that raising employee wages can be good for business. He realized that, if his business was to survive, he would have to share his wealth.