Time for a pay raise

Lana
Lana Payne
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"Increasing the minimum wage helps individuals and families achieve increased self-reliance and contributes to a stronger provincial economy."
- PC government July 2010
This was the provincial government's minimum wage policy.
It's been three long years with no pay raise for the province's lowest-paid workers, begging the question: what's changed?

Here's another one: why is a report that recommended immediate action to give low-wage workers a pay raise sitting on a minister's desk since October of last year?

Newfoundland and Labrador is expected to lead the country in economic growth this year and next. The Conference Board of Canada has estimated that our gross domestic product (GDP) will grow by a whopping six per cent in 2013 and 3.4 per cent in 2014, outpacing even Saskatchewan and Alberta.

Business lobby groups are elated by all the good economic news. They continue to crow about how great it is to do business here. The president of the St. John's Board of Trade has said it's never been a better time to be in business in Newfoundland and Labrador.

Yet these same business lobby groups continue to urge government to keep the minimum wage where it is.

And at the same time as they encourage the government to suppress the wage floor, they complain they don't have enough workers. The normal market economic response to such a dilemma - a tight labour market - is improved wages, benefits and working conditions. So much for the "corrective force" of free market economics.

Economic growth, prosperity, we are told should lift all boats. It does not.

Instead, thousands and thousands of Newfoundland and Labrador workers, the majority of them women, still depend on minimum-wage policy to get a pay raise.

 

The province has the highest percentage of the workforce of any Canadian jurisdiction earning the bare minimum (10 per cent of workers work for minimum wage). In addition, a significant number of workers earn between $10 and $12 an hour. In 2011, nearly 28 per cent of all working women, and 15.4 per cent of working men in this province earned $12 an hour or less.

More than 50,000 workers fall into this lower-pay category. And despite stunning economic growth over the last decade, our province still has a higher than average incidence of low-paid workers.

Last year, a statutory review of minimum wage, conducted by a government-appointed panel, called for action to be taken on the minimum wage. The panel recommended an increase to restore any erosion to the wage since 2010 as well as a formula, tied to the Consumer Price Index (CPI), which would see annual, incremental increases in the wage to ensure that it keeps pace with the increases in the cost of living.

The report and its recommendations sit on a shelf - it can be viewed at http://www.gov.nl.ca/lra/ min_wage_review_2012/MW Report.pdf

The lack of action denies thousands of workers a pay raise. Indeed, the lack of action results in a continued erosion of their wage - as time passes and the cost of living steadily increases, the minimum wage is worth less today than it was three years ago, the last time the wage was increased.

This inaction is a stunning reversal from a minimum-wage policy that had been aimed at making sure the province's lowest-paid were not left totally behind. In 2010, the government also said that minimum-wage increases proved the government's commitment to improving the quality of life of Newfoundlanders and Labradorians while making the province more competitive with respect to attracting workers.

Indeed, the government's previous progressive minimum-wage policy, which it appears to have abandoned in order to rely erroneously on the marketplace to deliver fairness or equity, also contributed to a smaller wage gap between women and men.

 

In 2010, the last time low-paid workers saw an increase, the wage gap between women and men had dropped to a historic low of 13.5 per cent compared to 23.5 per cent in 2000 before the government began its scheduled increases to minimum wage.

Sometimes the gap shrinks because men's wages are falling. This is not the case for Newfoundland and Labrador. Other factors explain the greater equality in women's earning capacity, including a changing occupational mix, unionization for women and minimum wage increases.

In 2011, when there was no minimum-wage increase, the wage gap kicked up again to 14.6 per cent.

Employers groups have urged the government to do nothing. They are the same groups who warned the economic sky would fall in if the government increased the wage in the 2000s.

But rather than economic disaster and job losses, the period between 2000-2011 saw job growth across the economic spectrum, including in the sales and service category (which includes hospitality and retail jobs). Employment in that sector grew at the same pace as average employment growth, by about 10 per cent between 2000 and 2011.

Youth employment also grew during this period, as did youth participation rates, despite a declining number of young workers in the province.

The Newfoundland and Labrador government's minimum-wage policy had been a success. Three years later, after all that hard work of playing catchup and making sure some of the prosperity is shared, the current government appears to have abandoned its commitment to helping the lowest-paid achieve "increased self-reliance."

The big question is, why?

Lana Payne is president of the Newfoundland and Labrador Federation of Labour. She can be reached by email at lanapaynenl@gmail.com. Twitter: @lanampayne Her column returns Sept. 7.

Organizations: Conference Board of Canada, St. John's Board of Trade

Geographic location: Newfoundland and Labrador, Saskatchewan, Newfoundland and Labrador.Yet

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