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Editorial: The wage illusion

The province’s minimum wage will increase by 15 cents on April 1, but that small boost might have even less of an impact than people think.
The province’s minimum wage will increase by 15 cents on April 1, but that small boost might have even less of an impact than people think. — 123RF Stock Photo

As sleight-of-hand goes, it’s almost perfect in its sneakiness.

Earlier this week, the provincial government announced a whopping 15-cent-per-hour increase in the minimum wage.

For a worker pulling 40 hours of work a week, it means they get to spend a whole $6 a week in additional pay to spend any way they like.

Some perspective: if all of the 13,000 minimum-wages workers in the province were working full time (which, of course, they’re not), it would mean an annual increase in costs across the province of $4,560,000.

That sounds big, unless you try to imagine the total payroll for everyone who is employed in the province. If you look just at the provincial government in 2017-18 — salaries cost $492 million for just 7,379 provincial employees, a fraction of the 212,300 people working in the province in January.

The estimated average weekly wage in the province in November 2017 was $1,045.46, and there were 190,900 full-time employees that year, so that theoretical annualized minimum wage increase of roughly $4.6 million is completely dwarfed by the full-time payroll of $10.38 billion.

But that’s not the real sleight of hand.

No, the real sleight of hand is what happens next.

For one thing, that means people being paid the minimum wage will never gain any ground. Increases in their costs and increases in their pay will be in lockstep.

The minimum wage will now change annually. According to the provincial Labour Department, it will work like this: “The increase, and future increases to take effect April 1 of each year, will be based on the percentage change in the national Consumer Price Index.”

Why do it that way? Here’s the Labour Department again: “Indexing ensures an open and predictable approach to setting the minimum wage, as opposed to the ad hoc approach that has been used previously, and reflects input gathered during public consultations held in 2017.”

Sounds great, right?

Not quite. For one thing, that means people being paid the minimum wage will never gain any ground. Increases in their costs and increases in their pay will be in lockstep.

But worse. They’ll be in lockstep with the federal average of increases in the Consumer Price Index — and what happens federally isn’t always what happens provincially. Last year, the national index rose by 1.6 per cent; the provincial rate, however, was 2.4 per cent.

And there are worse examples; in 2021, this province is expecting a doubling of electrical rates, an increase that will cascade through all sorts of costs, ranging from food to municipal taxes.

What mechanism will allow minimum-wage earners to keep up with rises in costs that are strictly provincial? Minimum-wage earners are already poorly positioned to take advantage of any energy-savings opportunities — they simply don’t make enough to offset the investment needed to reduce utility bills.

In other words, they’ll face a disproportionate share of increased bills, and a nationally Consumer Price Index-based standard minimum wage increase is poorly positioned to help with that.

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