Sep 20, 2016

An increase so small it keeps minimum wage workers in poverty

By cat-employment-labour

Today, BC’s lowest paid workers get a 40-cent raise. The latest increase of the provincial minimum wage—now $10.85 per hour for most workers isn’t much to celebrate. It works out to an extra $16 per week for someone working full-time – and that doesn’t stretch far in a province with such high cost of living.

In fact, minimum wage workers continue to earn less than the poverty line even if they work full-time 52-weeks a year.

It’s not just minimum wage earners who face the threat of working poverty. Making a dollar or two above than the minimum wage is still a poverty wage for a full-time, full-year worker. Even three dollars above the minimum wage barely clears today’s poverty line for a single person, and falls short of the poverty line for a single parent with one child.

Nearly half a million British Columbians—a quarter of all paid employees in the province—work for $15 or less per hour. And they would all benefit from a $15 minimum wage.

Critics like to argue that the minimum wage doesn’t matter for working poverty because too few people earn exactly the minimum. But they seem to forget that nearly half a million British Columbians—a quarter of all paid employees in the province—work for $15 or less per hour. And they would all benefit from a $15 minimum wage.

Some people mistakenly believe that low-wage jobs are filled mainly by teenagers and youth who work part-time after school, live with their parents, and are on their way to a better-paying job after graduation. But Statistics Canada data reveal a very different reality for the low-wage workforce earning less than $15.

The majority of BC’s low-wage workers are adults between the ages of 25 and 64 (53%). Few are (21%). Most are supporting a household (58%). And most are women (58%). students

The majority of low-wage workers also have full-time jobs (59%), and just over half work for corporations with more than 100 employees.

And while there is some truth to the belief that for youth, low-wage jobs are a stepping stone to higher-paying careers, many low-wage workers over 25 face a real risk of getting stuck in their jobs with little opportunity to earn more. Almost half of BC workers over 25 who earn less than $15 have been in the same job for longer than three years (45%).

Studies also indicate that recent immigrants and persons of colour are likely to be overrepresented among the low-wage workforce.

BC’s economy relies on these workers but it’s failing to provide them with a path out of poverty. The consequences are far reaching: from chronic stress and health problems to poorer school performance for children – and, fundamentally, lost human potential. At the end of the day this isn’t just a problem for low-wage workers and their families – it affects us all.

It’s also why a growing number of cities in the US, including Seattle, San Francisco and Los Angeles are moving to a $15 minimum wage. Washington DC, New York State and California have also approved gradual increases to reach a $15 minimum wage, and a number of other states are considering similar measures.

Closer to home, Alberta’s provincial government officially passed regulations to raise the minimum wage to $15 by 2018, and is eliminating its lower “liquor servers” wage.

BC’s economy relies on these workers but it’s failing to provide them with a path out of poverty.

Any proposal to increase the minimum wage by any amount seems to be met with dire warnings of massive job losses and impending economic doom. But neither history nor academic research supports these claims.

Just last year, the CCPA published a report by UBC economics professor David Green, whose analysis indicates that the likely impact of a $15 minimum wage on job losses would be much lower than feared. His research found that the overall benefits of meaningfully raising the minimum wage through a series of staged increases would far outweigh the costs.

A $15 minimum wage would significantly boost the income of low-wage workers as a group and, unlike today’s small minimum wage increase, would be enough to lift full-time workers out of poverty.

An often-overlooked benefit of higher minimum wages is that they make low-wage, high-turnover business models more expensive, thus creating incentives for employers to offer better, more stable jobs.

The evidence is clear: sticking with BC’s poverty-level minimum wage just doesn’t make sense.

This piece was originally published in The Province.

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