When is it time to raise the minimum wage?

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      Eight bucks an hour isn't rich. It doesn't get you far, and neither does it buy much. Like thousands of minimum-wage earners in British Columbia, Keona Wiley knows this reality too well.

      When Wiley moved to Vancouver in 2002, the 30-year-old Fraser Lake woman had a science degree and a lot of hope. With employers asking the natural-resources-management graduate for at least three to five years of work experience that she didn't have, she had no recourse but to take on jobs that offered only minimum wage. She also soon discovered that the only way she could survive was to live with other people in similar circumstances.

      "I have to live in a commune kind of thing," Wiley told the Georgia Straight. "You have shared accommodations. There were seven people in the house. We shared food. We ate just vegetarian–a lot of beans and rice, pretty simple stuff. We created our own entertainment. We never went out. We had potlucks. We can't afford to go out. People would come over for dinner and play instruments like guitars, or play games, like board games and card games. That way we don't have to go out."

      Getting a new set of clothes is another thing. "All my clothes were secondhand," she related. "Sometimes we'll have a clothes swap where everyone would bring all the clothes they don't wear very often. We just throw them in a pile in the middle of the room, and when you come out you have a whole bunch of clothes. They're new to you, right?"

      It wasn't a new experience for Wiley. During her student days at the University of Northern British Columbia, and after graduation in 2000, she went from cleaning rooms in ski resorts to waiting on tables, washing dishes, babysitting, and picking fruit. She paid for her education with a student loan that will still take years to settle.

      She said that what struck her then was that there isn't much concern about how minimum-wage earners get by. This only got reinforced when she relocated to the Lower Mainland. "It's jobs that don't expect you to last long," Wiley said. "The turnover is really high. There's no benefits. They don't really care if you make it or not. You're replaceable."

      There seems to be no sympathy from the government either, she added. "A lot of people who make all the decisions don't know what it's like to try and make it on $8 an hour," the East Vancouver resident said. "Anyone in the government who's making the decision, they don't make $8 an hour."

      B.C.'s minimum wage has been frozen at that level since 2001. In that same year, the B.C. Liberal government introduced an even lower rate of $6 per hour, popularly called a "training wage", for new hires without paid work experience. This 25-percent reduction in the minimum wage applies until 500 hours are worked.

      In April this year, NDP leader Carole James introduced a bill seeking to increase the minimum wage to $10. The bill also provides that wages be adjusted annually to inflation. It hasn't moved beyond first reading in the legislature, and it doesn't look like the minimum wage will change anytime soon as long as the B.C. Liberals hold a majority.

      "I can't really say that there are plans to review it," Minister of Labour Olga Ilich told the Straight. "At the moment, we're staying at the minimum wage that we have."

      According to Ilich, B.C.'s booming economy and the shortage of labour are driving wages up without need for government intervention. "The average hourly wage is over $20, which is two-and-a-half times the minimum wage, and this is up even from last year by about 3.5 percent," she said. "What we're concerned with, obviously, is making sure that people have jobs and that the economy keeps going so that there continues to be jobs."

      The B.C. Liberal minister also pointed out that based on provincial government figures, the number of minimum-wage earners dropped to 82,000 this year from 95,000 in 2006. She also said that more than half of those workers are aged 15 to 24 and many of them are working in family-owned businesses.

      "Anecdotally, if you go and take a look at people looking for employees and what they have to pay now, you can see that people are having to pay more," Ilich said. "There's more people making more money."

      Pablo Benavente, though, a 19-year-old Chilean Canadian, works for minimum wage in a hardware chain while studying at an art school in Burnaby. He stays at home and eats the same food as his family; his wages help support the entire household. "My mom has stopped working and my stepdad is on disability," Benavente told the Straight. "It would be nice to have extra money in my pocket."

      On September 3, the B.C. Federation of Labour issued a 10-page "Labour Day" report stating that low-income families are working longer to make ends meet. The document notes that since 1996, average annual hours worked by B.C. wage earners have risen to about 1,500 a year. For those in the lowest 10 percent in terms of income, average annual hours increased to 2,300.

      "Between 2002 and 2006, total employment (excluding self-employed) increased by 11.2 percent, but the number of people working over 40 hours a week increased by 19.2 percent; the number of men working over 40 hours a week increased by 15.1 percent, and the number of women by 24.2 percent," the report points out.

      As the paper notes, families have to work longer just "to stand still".

      This was a reality for Rowena Flores, a 37-year-old mother from the Philippines, in the first few years after she and her family arrived in Vancouver in 2002. She had to hold two jobs–both at minimum wage–and work shifts, often nights. She would leave for work when her husband came home from his job, which paid a bit more than $8 an hour.

      Even with three jobs between husband and wife, it was a challenge to treat their kids in a local burger joint. "Of course, you'd have to compute first how much that will cost," Flores told the Straight. "It meant asking how many hours you'd have to work to have an eat-out. You've got to think first about making the rent."

      STATISTICS CANADA provides a definition of low income through a measure that is known as the low-income cutoff, or LICO. The agency defines the LICO as "an income threshold below which a family will likely devote a larger share of its income on the necessities of food, shelter and clothing than the average family".

      StatsCan sets different LICOs, depending on the number of people in a family and the size of the community. For 2005, the low-income cutoff before taxes for a single person living in an urban setting with a population of at least 500,000 was $20,778. This is higher than the $16,640 before-taxes income a minimum-wage worker can earn by working 40 hours each week for a whole year.

      For a person living in an urban area with a population of less than 30,000, the LICO is $16,273.

      Even a wage increase to $10 will just put a worker barely above StatsCan's LICO of $20,778 for one person in an urban setting like Vancouver. Full-time work at $10 represents $20,800 before taxes.

      Almost a quarter of a million B.C. workers earn less than $10, according to the September 3 B.C. Federation of Labour report.

      The report also points out that workers making less than $8 increased from 20,100 in 2005 to 24,500 last year. Some 221,000 others earn between $8 and $9.99 an hour. More than 60 percent of those earning less than $10 are women. Of the estimated 245,500 workers getting less than $10, more than half, or 134,000, worked full-time.

      "Business groups claim that almost all low-paid employees are young part-time workers who live at home," the B.C. Federation of Labour paper states. "But that is not the case. In fact, those who earn less than $10 per hour in B.C. are evenly divided between the 15-to-24-year group and those over the age of 25 who are in their prime earning years."

      The 2005 LICOs were identified in a StatsCan research paper titled Low-Income Cutoffs for 2005 and Low-Income Measures for 2004, released in April 2006. The document explains that "defining poverty is far from straightforward" and that LICOs are simply "indicators of the extent to which some Canadians are less well-off than others based solely on income".

      A year before releasing the document, StatsCan issued a paper titled Low-Paid Work and Economically Vulnerable Families Over the Last Two Decades. Defining a low-paid job as one that pays less than $10 an hour, it notes that the proportion of such employment across the country has remained stable during the past two decades.

      "In 1981, 17% of the jobs held by workers aged 25 to 64 paid below $10 per hour (in 2001 dollars), compared to 16% in 2004," the paper states. "Thus, in spite of improved economic conditions, little progress has been made regarding the prevalence of low-paid jobs. Conversely, one may argue that the proportion of low-wage workers has not risen. Meanwhile, the proportion of well-paid jobs (those paying $30 or more per hour) increased from 8.5% in 1981 to 11.4% in 2004."

      Minimum-wage jobs are often regarded as steppingstones to higher-paying employment, the document notes. It also mentions a common belief that higher education will increase one's chances of getting a better job. The paper points out that chances of escaping low-wage jobs haven't improved despite increases in education levels. "This finding implies that for workers with a given level of education, the probability of exiting low-wage work must have fallen," it states. "This may be true especially for those with low levels of education."

      The paper cites concerns about the economic vulnerability of full-time workers who don't receive a "living wage", which it defines as a "wage needed to keep them out of poverty".

      "In this context, it might be desirable to ensure that the income full-year full-time workers receive in the labour market is adequate to keep them out of low income," the document states.

      While low-paid Canadians are being left behind amid the economic progress of the country, this situation is acute in British Columbia.

      The B.C. Progress Board, an 18-member panel established by Premier Gordon Campbell and composed of leaders in business and academia, pointed out in a report issued on July 10 this year that the province had the third-highest real personal disposable income per capita in Canada, at $21,984, in 2006.

      But the same report also states that B.C. ranked second-last in Canada for having the most "families and unattached individuals" (17.3 percent) with incomes below the 2005 after-tax low-income cutoff level set by StatsCan. The paper also notes that this prevalence of low-income British Columbians was 2.1 percent above the Canadian average.

      "All provinces saw decreases in the proportion of people with low income between 1996 and 2005," it states. "British Columbia had the fourth smallest decrease at 19.5% and Alberta had the largest decrease at 37.0%."

      The B.C. Progress Board–charged with advising Campbell on how to improve B.C.'s economic health and its citizens' well-being–uses LICOs as one of five measures of "social condition", the four others being low-birth-weight rate, personal and property crime, income assistance, and long-term unemployment. Its report states that B.C. ranked ninth among Canadian provinces in social condition in 2003, 2004, and 2005.

      Although there may be disagreements on how to define poverty, the B.C. Progress Board's report notes that there are a number of "negative outcomes" facing low-income families. "People with low income may experience more physical and mental health problems, rely more on charity, obtain lower levels of education, or have higher secondary school drop-out rates," it explains.

      NIELS VELDHUIS, senior research economist at the Fraser Institute, told the Straight that raising the minimum wage would result in reduced employment and a decrease in job training for prospective workers.

      "It's influenced by labour costs," Veldhuis said in a phone interview. "Naturally, if labour costs go up, employers are going to cut back on the number of positions and try to increase the productivity of workers. The people that you're going to actually impact when you increase the minimum wage are the young and the unskilled. If you reduce the employment opportunities for those people, they're not going to have those skills that they require to move up the wage ladder."

      A March 2007 paper published by the Canadian Centre for Policy Alternatives gives a different view of the relationship between increasing minimum wage and employment levels. Called Bringing Minimum Wages Above the Poverty Line, the document notes that studies conducted in the U.S. in the 1980s and 1990s "tended to find employment effects that either were substantially below the range of 1-3%, were statistically insignificant, or were so small as to be immaterial".

      One of the CCPA paper's authors, Stuart Murray, told the Straight that there is no better time than now to give B.C. minimum-wage earners an income boost. "In terms of what's possible and reasonable, we should look at the fact that our economy has improved significantly," Murray said. "In terms of what the basic cost of living is for a single individual living in a major city, $10 an hour is the right number. Right now is a time when there's unlikely to be any adverse effect on employment levels."

      Mark Startup, the president of Retail B.C., contends that it's best to leave government out of the wage issue and just leave the matter of fixing workers' compensation to the market. He argued that increasing the minimum wage would only ratchet up all salary rates above the current minimum.

      "We know that wage rates have increased as a result of labour shortage," Startup told the Straight. "One could predict that if there was material increase in the cost of labour resulting both from a labour shortage or a legislated increase to minimum wage, then it would follow that the cost of goods and services could increase."

      This argument doesn't impress David Green, a UBC economics professor. He noted that economies over time have demonstrated how flexible they are in producing goods and services that societies need.

      "The sort of notion that if you raise the price of labour, everything just is gonna go downhill is not true," Green told the Straight. "If you make some of these adjustments, firms will make adjustments. They'll change the way they produce."

      For Green, the issue of raising minimum wage is about fairness. "It's hard to argue that there is an economically optimal minimum wage," he said. "If all you want to do is worry about economic growth, you might well set the minimum wage towards zero. The question goes beyond economics. Do we want people working full-time in our economy [who] are still below the poverty line? It's really a question of what we want our society to look like."

      Comments

      1 Comments

      Bill Gates

      Apr 19, 2010 at 12:42pm

      the cost of living in B.C. is much higher then in ontario .

      there minimun wage in 2010 is $ 10.00 per hour.

      there is no way anyone can suvive @ $ 8.00 per hour.

      why are we not matching othe rcountries?

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