$15 minimum wage would be bad for the Atlantic Provinces

By Henry Gray (AIMS on Campus Student Fellow) 

Growing up in New Brunswick, the local McDonald’s provided a perfect entry into the labour market and an excellent way to begin to earn income for myself to save up for university. My job at McDonald’s taught me general, transferable skills to prepare for a career: work ethic, time management, teamwork, and customer service. As eager as I was at 14, the majority of my spare time was occupied by personal endeavours such as listening to indie music, and most of my mental energy at work to thinking up ideas for songs to write. Many of my colleagues were well worth the wage, but my efforts were not worth much more than the $9 an hour the province mandated that my employer pay. Certainly not the $15 an hour rate that minimum wage workers in Alberta are slated to enjoy as of October 2018.

 

So what would have happened to me had New Brunswick set the minimum wage at $15 while working at my local McDonald’s? In the best-case scenario, I would have been paid $15 an hour for singing between serving customers at the cash register. In the worst-case and far more likely scenario, and indeed this has been the reality for many minimum wage workers, I would have been out of a job.

 

As Matthew Lau and Marco Navarro-Génie discovered in their paper “Revisiting the Minimum Wage in Atlantic Canada” (2017), minimum wages, which have only gone up over the past several years and are slated to continue to do so, hamper the ability of young people to gain employment and to acquire employable skills.

 

The Atlantic Provinces hold the dubious distinction of having the most people per capita at or near the minimum wage in Canada. This is indicative of a weak economy, and the result of raising the minimum wage will thus be felt most severely here. While labour unions and anti-poverty activists have been known to suggest that raising the minimum wage will help unskilled workers and the poor, this policy will, in fact, disenfranchise and marginalize them even further. Some members of this already vulnerable population may be subject to the loss of their jobs, as their employers may not be able to afford to keep them on at an artificially inflated wage, while others may be prevented from entering the labour force altogether if their labour is worth anything under $15 an hour. To be certain, those who keep their jobs will be making more money, but for those who do not make the cut, a minimum wage hike represents unemployment rather than a pay rise. Moreover, my former employer, McDonald’s, has produced out self-serve kiosks, part of a trend towards automation that will only grow more widespread as minimum wage hikes drag labour costs upward.

 

Rather than reducing income inequality and empowering marginalized people, the minimum wage actually hurts those it is intended to help. It increases unemployment among the lowest skilled members of society, leads to greater demand for government welfare spending, and causes economic growth to falter, leading to less economic opportunity for all.

 

As Lau and Navarro-Génie recommend, provincial governments would see far better results by reducing the barriers to employment, raising the basic tax exemption, and unleashing the private sector to allow it to create jobs and wealth.

 

Legislating further increases to the minimum wage would actually further increase youth unemployment and exclude many unskilled workers and those in a lower socio-economic class from the labour force. Young people in Atlantic Canada are far better off given economic opportunity to better themselves, to learn skills that can be further developed later, to learn how to manage money, and to contribute to the economy.

 

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