Addressing minimum wage thing

Mike's Musings

Provincial NDP leader John Horgan came out recently saying that if his party gets to form the next government, they will raise the minimum wage to $15/hour.

While this was welcome news to those who have been fighting (and often failing) to keep their heads above water these days and are not earning enough to live comfortably because an income from working at full-time at minimum wage is still below the poverty line, I’m of the opinion that raising the minimum wage so significantly may, in the long run, do more harm than good.

Now don’t get me wrong, I’m all for lifting people out of poverty, and that’s exactly what raising the minimum wage to $15 would do.  In a 2015 study produced for the Canadian Centre for Policy Alternatives, entitled, “The Case for Increasing the Minimum Wage,” David Green cites “the significant body of academic research about the economic impacts of minimum wages to assess the likely costs and benefits of an increase in BC’s minimum wage to $15 per hour.”

It’s an excellent study, and makes many good arguments that I completely agree with. Claims that opponents make about how raising the minimum wage by that much will lead to massive job cuts are simply not credible, the study finds.

I agree.

Raising the minimum wage to $15 gives employers less incentive to operate on a low-wage, high-turnover model, which would lead to more stable, long-term employment for people, the study finds. I agree with that, too. Focusing on teenage or unskilled/uneducated workers as being the ones who earn minimum wage in our society “plays up an inaccurate stereotype about who earns very low wages in BC and leads to exaggerated claims about job loss. Only 26 per cent of those currently making between 10.25 and $12 are teenagers.”

I agree again. I should really be on this guy’s team. But I’m not, I’m afraid.

What needs to happen to get people out of poverty and help everyone be better off is not to give the people at the bottom of the socioeconomic scale more money to spend because everything is too expensive, but to find a way to make it so that things are less expensive.

I’m totally of the opinion that raising the minimum wage will also raise minimum wage earners over the current poverty line, but what happens when the poverty line moves up in response to cost increases due to the minimum wage going up? In the long run it would only bring more people down toward that line.

Because do you really think that employers are going to give their entire staff a 40 per cent raise if minimum wage goes up 40 per cent? Or maybe you naively think that raising the minimum wage won’t cause prices of things to go up.

It absolutely will.  And that gives everyone currently making $17, $20, even $25 per hour less buying power.  The minimum wage going up 40 per cent will only help those making not enough to live comfortably until the economy catches up with that increase, at which point it will hurt all those those making barely enough to live comfortably.

What we need to do is turn our attention to figuring out how to make things like housing and food less expensive, not give some people more money to deal with the fact that those things are too expensive.