Minimum wage hike to $10?

The BC federation of labor is making noise about the need to increase the minimum wage in BC to $10 an hour or higher. Just so we’re clear, that would be a province-wide increase, not just in Vancouver, with its relatively high cost of living.

The intent is to ensure that no BC worker lives below the poverty line. Their rhetoric is buoyed by a new public opinion poll showing that 79 percent of British Columbians support the move to a $10 minimum wage.

Could be a good idea. Of course, more money for workers means less money… well, for workers. Businesses will have to make some tough decisions.

But before the wage hike goes through, people really ought to be asking themselves – is a full-time McJob burger flipper really entitled to the kind of paycheck that will ensure that they can be economically self-sufficient, living away from mom and pop, or possibly with children to take care of?

In a Canadian context, perhaps it is only fair that someone working hard at a full-time at a job, no matter how low the position is, ought to be entitled to the minimum of financial independence.

But it is only in our super-wealthy society that such entitlement even makes sense.

In any case, to all those hoping for this two dollar an hour increase, I wish you the best of luck. Hopefully, I’ll be able to take advantage of a little karma when I get around to asking for my own 20 per cent wage increase.

7 Comments so far

  1. msbonne (unregistered) on April 7th, 2007 @ 9:23 am

    I’m assuming your sally was said with tongue firmly planted in cheek. Wages are a part of the costs in businesses that run on minimum wage jobs, it’s true. However, your seeming arrogance and insensitivity is the main message of your post.

    It sounds like you think you are “better” than the full-time McJob burger flippers. Can this be true?

    If you are, then why don’t you show them how to live on the equivalent of $10 per hour in “metro” Vancouver. At that pay rate you’d probably take home around $1350 per month.

    After you pay $750 for your rent, and $50 for a bus pass, you’d have $550 a month for food and everything else. Could you manage a decent life for an extended period living like that?

    Life is not an upwardly mobile paradise of opportunity for everyone who starts out in a minimum wage ghetto.

    One can always trade some smugness for compassion. It doesn’t cost anything. Maybe you should consider making that trade, before life makes it for you.

  2. Jonathon Narvey (unregistered) on April 7th, 2007 @ 10:42 am

    Oh, no! I’ve been outed as a heartless fiend once again.

    Actually, I’m quite aware that it is not easy to get by on minimum wage. When I was doing that (in Winnipeg) the minimum wage was around $5.45. My take-home pay was about $872 a month, before taxes. Not nice. It’s been a long time since then, but with inflation and factoring in cost of living, it compares with the figure you present ($1350 a month).

    I didn’t take the bus, most of the time because I couldn’t afford it. I walked to work in four feet of snow, often in -30 temperatures. I drank powdered milk because it was cheaper than the fresh stuff. My diet consisted mostly of peanut butter, bread, tomatoes and endless cans of tuna.

    No coffee. No beer. No restaurants.

    And $750 for rent would have been a luxury I could ill afford – I shared accomodation in an old house for $350, plus utilities.

    I certainly never thought it was a realistic proposition to “manage a decent life for an extended period” on what I earned. Frankly, I knew that I wasn’t naturally entitled to such a thing and that the state was not obligated to improve my standard of living just because I was sick of canned tuna and having to stay at home every weekend.

    Fortunately, I did have the opportunity to go back to university and finish my degree and thereafter find more stimulating and higher-paying work.

    I’m aware that, for a lot of reasons, not everyone will have that chance. I do feel for them.

    But I do think it’s fair to expect minimum wage earners to have to make sacrifices to make ends meet. If everyone got paid what they wanted instead of what they were worth, there would be little incentive for folks to get ahead.

    That said, if a ten dollar an hour wage makes things a little easier for a lot of people in this city, that’s great – all the power to them.

  3. msbonne (unregistered) on April 7th, 2007 @ 11:25 pm

    You’re sounding a little like my grandpa who had to walk four hundred miles to school in a tornado every morning while herding buffalo, and in no shoes, to boot!
    You must have some cojones if you didn’t take the bus in those bitter Winnipeg winters. Maybe you are as old as my grandpa, and they didn’t have buses?
    Very few people who earn in the six figures can tell you definitively why they are worth that much. Usually its because they are good negotiators with well-honed senses of entitlement. Why aren’t we more outraged by them? If a $10 minimum wage increases costs, it will increase them across the board, and ultimately small businesses will not lose their market share. Isn’t that how the wisdom of the market works?

  4. Jonathon Narvey (unregistered) on April 7th, 2007 @ 11:49 pm

    If minimum wage is increased across the board, this will have no effect on market share. It will, however, reduce the number of people who will have jobs in businesses that are having trouble making ends meet. Pretending that there is no cost to a wage hike doesn’t make it so.

  5. Ryan Cousineau (unregistered) on April 8th, 2007 @ 9:39 am

    Msbonne: regarding McJobs, when I go in to a McDonald’s, the full-time burger flippers I see mostly look as if they might be moonlighting as high-school students.

    And that’s the reality of a lot of minimum-wage jobs: they are largely held down by students of one flavour or another, or young people entering the job market for the first time.

    This is one of the problems with “living wage” minimum wage proposals: it’s a very inefficient way to transfer money to poor people, because a large amount of that wage subsidy goes from the business owners into the pockets of kids or students who aren’t exactly living on ketchup soup.

    Raising the minimum wage also acts as an economic penalty on the creation of low-wage jobs. But while the obvious substitute is a higher-wage job, there are a couple of unexpected outcomes: the prices may go up (note that a lot of low-wage earners are working in businesses that cater to low-wage customers: forcing McDonald’s (or your favourite falafel shop, or the corner grocery store) to raise its prices tends to affect the poorest people disproportionately.

    More importantly, the job may just go away. Most minimum-wage jobs are pretty low-skill, and are vulnerable to outsourcing or automation. In the worst case, the service the job provided simply disappears because it’s no longer economical. Maybe this means the falafel shop is no longer open 24 hours, so the two people who were working the graveyard shift now have to do something else.

    Hah. I have the TV on in the background here, and they’re asking a basketball player (Dwayne Wade) about his first job. He worked at KFC as his first job.

    An extreme example of income mobility through one’s life, but one widely repeated among the accountants, computer nerds, and HR clerks of the world: we all start out earning minimum wage, and then we get better.

    If you want to pursue the details of the minimum wage debate in detail, you may wish to peruse Why do (some) economists support the minimum wage? at Marginal Revolution. The blog’s authors are econ professors, and here they’re discussing a survey of economics professors who signed a petition in 2006 supporting a minimum wage rise.

    Fun stuff, and a good starting point.

  6. msbonne (unregistered) on April 9th, 2007 @ 10:33 am

    I’m not sure what the most efficient ways are, other than employment, of transferring wealth to the poorer classes. But then, I am not an economist, nor a neo-con.
    I do recall Brian Mulroney, in an election debate way back in the last century, stating very clearly that the best social program in the world is a job.
    I’d suggest to you both that it may be time to go back to the approach of “raising the bottom.” You youngsters seem to be stuck in the very very old belief in social darwinism–a doctrine our parents fought hard to overcome with democratic social programs. It seems everything old is new again, for those who are destined to repeat the errors of old.
    So, what do you suggest as a good mechanism for transferring “wealth” to the poorer classes? I always liked the neo-conservative idea of a negative income tax, but it seems to have never caught on in practice.

  7. Ryan Cousineau (unregistered) on April 13th, 2007 @ 1:06 pm

    Well, Brian is right. But the point is that raising the minimum wage will tend to diminish the number of minimum-wage jobs.

    How does that help the minimum-wage workers?

    Having a good economy is a great way to help the poor. If I was poor right now, the only place to go would be either to a construction site in Vancouver, or to the oil patch in Alberta. Either location is paying wages far in excess of the minimum.

    The best wealth transfer for the poorer classes is for them to work hard, don’t do crimes, and don’t drink too much. It sounds simplistic, but it’s essentially that model which has driven the routine success of immigrants to Canada (and the US).

    Negative income taxes are interesting, but have many of the same “welfare trap” features of any other system.

    The answers to the question aren’t especially easy. But because raising the minimum wage essentially tries to short-circuit prosperity and wealth transfers by robbing from businesses that employ low-skill workers and giving to the poor, it’s not generally the right answer.

    The problem with “raising the bottom” is that it is a philosophy with a few tenuous success stories and lots of really horrible failure stories. Understand that to the extent that there’s a political argument here (as opposed to a bald economic prediction that a minimum wage rise will have perverse, poor-punishing effects), it’s that being poor in a prosperous society is a lot better than being average in a rotten society, and that most proposals (land reform, rent control, minimum wage rates) to “raise the bottom” tend to make the whole of society poorer without making the poor much richer (and in many, many cases, the poor end up even worse off).

    It’s not social darwinism. It’s more a matter of avoiding perverse incentives and unintentional consequences, which is the hard part of any economic program.

    I think everyone agrees that the poorest people in Canada should be better off, but when you’re really looking at the lot of Canada’s most wretched citizens, they almost always suffer from some awful fate like drug addiction, mental illness, or some similar horror of upbringing or abuse.

    In all of these cases, the trouble isn’t essentially economic, it’s social.

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