Going back over four decades, I studied changes across Canada in labour standards legislation, especially as they apply to minimum wages. The minimum wage is the lowest hourly pay an employer can legally pay an employee whether they work part-time or full-time. In Canada, minimum wages are primarily the responsibility of each of the ten provinces and three territories. However, there is a federal minimum wage, which came into force in December 2021, adjusted automatically on April 1 of every year based on the average annual increase of the Consumer Price Index (CPI). The federal minimum wage applies to workers and interns in federally regulated private sectors, including banks, postal and courier services, and interprovincial air, rail, road, and marine transportation — or roughly 6% of private sector employees in Canada. The federal rate is currently set at $15.55 per hour. Provincial and territorial minimum wage rates currently vary from $13.00 per hour in Saskatchewan to $15.50 in Ontario.
Years after minimum wages were in first introduced in British Columbia and Manitoba in 1918, other jurisdictions followed suit. Minimum wages are calculated and adjusted differently among the provinces, territories and the federal government. Rates can be determined and adjusted according to regulations, rates of inflation and social and economic conditions. In 2013, 61 percent of employees earning minimum wage were between the ages of 15 and 24, especially those working in the services sector (e.g. restaurants and fastfood chains) and the retail sector. In recent years, there are those who argue that the current minimum wage rates do not reflect what became referred to as a ‘living wage.’ Originally, the formula for minimum wages was thought to be aligned with the average industrial wage rate, usually representing about 60 percent of that rate in Canada. However, over the years, the determination of annual minimum wage rates became more a political factor based on the policies of the governing parties in power. As a result, increases in the rates began to vary more extensively among jurisdictions and depended on the particular government in power. For this reason, minimum wage rates began to lag far behind the rate of inflation and average industrial wage rates.
In today’s economy, many will rightly argue that current minimum wage rates, especially in urban centers, are putting workers in a near poverty situation given the high cost of living in many cities. Matters have been made worst by the current hyperinflation being experienced across Canada. As a result, many low-wage workers are required to have more than one job just in order to make ends meet. Labour advocates say recent minimum wage gains are long overdue. However, they also now advocate that the long-championed goal of a $15 an hour pay floor across the country no longer goes far enough to address the affordability crisis. “We’ve been calling for a $15 an hour minimum wage for so many years, but now it’s no longer enough,” said Bea Bruske, president of the national Canadian Labour Congress. “It really needs to be $20 an hour or more when we look at inflation and the cost of food and housing.”
Business organizations on the other hand continue to use the same old arguments against having a living wage. These include the argument that higher minimum wages would cause employers to reduce the number of employees and the number of hours worked, potentially leading the hiring of more part-time workers. A 2014 report from the right-wing Vancouver-based think-tank Fraser Institute concluded that both economic theory and the evidence suggest that living wages, like minimum wages, create distortions in the labour market that have a negative impact on employment. Left-wing organizations in Canada, including the Canadian Centre for Policy Alternatives and Living Wages for Families continue to campaign for living wages, arguing a higher standard of living will benefit the overall economy.
Remember what Henry Ford said about higher than normal wages for his automotive assembly line workers in the early 1900’s. He argued that not only would the high turnover rates for the dull and monotonous work — running at over 300 percent — be reduced, but his workers would eventually buy his Model Ts as many of workers could then afford to buy one for themselves. In today’s consumer society, one can argue the same is true for many low-income workers if they were to have a living wage.
FROLITICKS 