Opponents of a living wage often argue that increasing the minimum wage to $15 would harm people living in poverty due to increased inflation.
In its submission to the Minimum Wage Review Committee last year, the St. John’s Board of Trade argued “an increase to the minimum wage that is not tied to (the Consumer Price Index)… would have a negative economic impact on all Newfoundlanders and Labradorians, including the most vulnerable groups which an increase in the minimum wage is intended to help the most.”
Living wage opponents point to a Department of Finance projection that a “$15 minimum wage by 2023 could reduce the real purchasing power of N.L. consumers by 1.2 percentage points.” But the benefits of a 31.6 per cent wage increase for minimum-wage workers will hardly be negated by a 1.2 per cent increase in the cost of living.
Governments have to do much more to care for the most vulnerable members of our society.
An increase in the minimum wage from $11.40 to $15 over three years “could” cause a 1.2 per cent increase in the cost of living, which is an average increase of 0.4 per cent per year. While such an increase is not insignificant, it’s hardly catastrophic, especially when we consider that the average provincial CPI increase over the past five years was 1.64 per cent — without a $15 minimum wage.
The Department of Finance has expressed concern over the negative impact such an increase in the cost of living would have on others living in poverty, particularly low-income seniors and income-support recipients, who would not benefit from an increase in minimum wage. This is a valid concern.
Low-income seniors and income-support recipients struggle with cost of living increases every year. Maintaining poverty wages for our lowest-paid workers will not end their struggle. Progressive, compassionate government policy grounded in respect for human dignity will.
The minimum wage has increased to $11.65 an hour since the Department of Finance made its projection. It will soon increase to $12.15, and then to $12.65 in April 2021. Any inflationary pressure that “could” result from these increases will be reflected in the CPI soon after.
Thus, a further increase of $2.35 an hour to a $15 minimum wage will not add significantly to the cost of living. When Ontario increased its minimum wage by $2.40 an hour to a $14 minimum wage in a single year, CPI increased by only 1.5 per cent. That’s less than their five-year average of 1.8 per cent (2015-2019).
A legislated living wage for all workers with increases tied to CPI will not, in isolation, eliminate poverty; rather, it should be an inseparable component of a comprehensive poverty reduction strategy.
Governments have to do much more to care for the most vulnerable members of our society.
Rejecting the absurd notion that we can help people living in poverty by allowing employers to continue to pay poverty wages is a great place to start.
Mark Nichols, community organizer
$15 and Fairness NL
