With the minimum wage hike on Oct. 1, there have been a number of opinions surfacing on both sides of the spectrum.
There are strong opinions around minimum wage because it affects people personally by impacting their livelihoods — both those living in poverty and those in business. We recognize those in poverty have rising costs with fixed income, personal and family obligations and various challenges impacting them. We also recognize that businesses also have rising costs, various risks (personal and business risks) and regulatory challenges along with some struggling with very small profit margins. When fixed costs, overhead and bills are taken into account, business owners are often the last people to get paid and sometimes not paid at all.
Often it is assumed that a Chamber of Commerce has a biased opinion because its membership is primarily comprised of businesses. However, as a Chamber, we must have the best interest of our entire community at heart, as our community must prosper for business to ultimately succeed. It’s part of our ecosystem. As a result, we conduct research that takes into account all angles, we work collectively to find solutions and we seek to move the dialogue forward in an effort to reach the best possible outcomes for our community.
In 2015 the Medicine Hat & District Chamber of Commerce, along with the Alberta Chambers of Commerce, adopted a position on minimum wage. This was due to the fact that there was not enough of a robust conversation around cause and effect. The government stated that Alberta was one of the lowest minimum wage earners in the country. However, the government failed to mention that Alberta’s minimum wage earners ranked as the second highest when calculating after-tax income. Beneficial tax policies were and still are an important tool to increase the amount of wages that are taken home at the end of the month and we didn’t feel the government was looking at the full scope of options and opportunities.
We were very conscientious about the overall problem the government was seeking to solve and, as such, we were saying that we should look at using multiple levers to solve the complex problem of poverty.
Our first recommendation we made was to assess minimum wages annually and revise by the percentage equal to the percentage change in the Alberta Consumer Price Index (CPI), while also providing adequate notice for businesses to adjust. We also asked for an ongoing research program to collect data and information in order to address policy relevant minimum wage issues and poverty reduction strategies.
In 2018, we amended our position, following the wage increases from 2015-2017, to maintain the current minimum wage rate at $13.60. However with doing so we also recommended the government phase out the personal income tax rates for low wage earning Albertans. By focusing solely on minimum wage the province hasn’t changed the tax environment, but rather has asked business to bear the full cost of the wage hikes. We would argue that looking at the levels of taxation could be equally effective, or perhaps more so, in alleviating the struggle of low income wage earners.
At $13.60 per hour the provincial and federal government receives $233.81 per month in tax remittances and at $15 an hour, they will see a combined $290.47 going to the government’s revenue streams per person, per month.
What we’ve been stating is that instead of raising wage rates, which ultimately raises the price of goods and services as businesses try to recover those rising costs, perhaps the government needs to take a look at why they are taxing our low wage earners, leaving less in the pockets of those individuals at the end of the day.
We start to question whether the issue has become so overly politicized that we are not talking about real outcomes and real solutions that could create a win-win for everyone involved and a collective buy-in towards a solution, rather than polarizing the issue and creating a divide.
Unfortunately we know the law of demand dictates that when the price of labour rises, the quantity demanded will fall. We also know that as costs rise, whether labour costs, regulatory costs, taxes, etc., so do the prices of the goods and services we buy.
The challenge with solely focusing on minimum wage is that we will not fix the overall problem and as a result, we’ll see some unintended consequences along the way. Minimum wage will raise the wage for those working, however it completely discounts those who are unemployed or who become unemployed because of business layoffs, closures and changes in operations. How do we make sure those people don’t fall through the cracks? Focusing on one factor alone is just not good enough and we have the ability to do much better.
Good public policy is possible without an “us” versus “them” approach, by having meaningful conversations, making sure issues are not politicized and looking at policy that is fair, balanced and is workable for everyone. By having conversations, we can perhaps see the full picture and find solutions that will allow us to get where we need to go, together.
Unfortunately on this issue, the time for those meaningful conversations has passed and we are left to monitor the impacts. Our hope would be that future conversations will be more collaborative and inclusive and result in much better outcomes.
Lisa Kowalchuk is the executive director of the Medicine Hat & District Chamber of Commerce. For more information on this column or the Chamber, contact 403-527-5214.
