Mar 23, 2011

More thoughts on BC’s new minimum wage


As some of you may have seen, Adrienne Montani (of First Call) and I had a piece in the Vancouver Sun earlier this week: a “memo” to the new Premier on what a “Families First” agenda should look like . (If you didn’t see it, you can find it here.)

In it, we praised Cristy Clark for her quick action on the minimum wage, announcing that it would move to $10.25/hour by May of next year. Of course, kudos should go to all those who have campaigned on this issue for a long time.  We did express concern about what happens after May 2012, emphasizing that ultimately, the minimum wage should be based on a a clear rationale, namely, tie it to the poverty line and index it, so that we can cease having this debate every couple years.

On a related point: some critics have said that increasing the minimum wage as Premier Clark has done won’t reduce poverty. Well, yes and no. If the minimum wage were now linked to the poverty line (such that a single person working full time, full year at the minimum wage would have an income at the Low Income Cut-Off), it would need to be about $11.50 in 2011. So if you are only increasing the minimum wage to $10.25 by next year, you are not going to see any noticeable reduction in the poverty rate (the breadth of poverty). However, this new increase will have an impact on the depth of poverty, bringing thousands of households and individuals closer to the poverty line. And that matters.

One other outstanding concern relates to the newly introduced lower minimum wage for people who serve liquor. Their minimum wage will only reach $9 in May 2012, based on the premise that they will make up the difference in tips. While there are certainly high-end bars where workers make great tips, there are also many lower-end and quiet ones where workers do not make $1/hour in tips. And personally, when I tip, I’d like to know that I’m paying someone extra (above a poverty wage).

BC Federation of Labour President Jim Sinclair also raises some important flags about this alcohol servers wage in another Vancouver Sun opinion piece (here).  Similar concerns were raised in a short report produced by the CCPA’s Manitoba office in 2001, available here. The CCPA report notes the following about a “tipping wage”:

The majority of those we interviewed do not believe a two-tiered tipping wage is a just or desirable policy. And many say that, based on their experience, such a policy would be almost unmanageable and very much open to abuse. A little less than half of our respondents receive an average of one dollar or more in tips each shift…

Many workers–both those who do and those who do not earn tips–feel that people deserve tips as a compliment to their wage…

Many workers do not have control of their tips even once the tips have been received. Many businesses divide tips evenly among the employees; often this is done after each shift by those who have worked the shift. But many workers receive their tips only every two weeks and must trust others, most commonly management, to fairly divide the money. To add to this, because of the variable nature of tips, there is no way of knowing how much one is entitled to over each bi-weekly period.

Minimally, having gone this route, this new policy will require careful enforcement and evaluation.

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