Minimum
Wages lead to Canadian Nightmare
“Ill fares the land, to
hastening ills a prey;
Where wealth accumulates, and
men decay”
And Ontario is fast becoming that land. One of the richest regions of world, with paradoxically over 190,000 people living below the poverty line, is something that is repugnant to the concept of equity, and all canons of human justice, that is a much lauded Canadian value. The guaranteed minimum wage is so low that their all hopes of leading a happy life are dashed to the ground; their dream of owning a home and of imparting University education to their children remains a pipe dream. It is especially so for the new immigrants. They come to this country with excellent qualifications, and professional experience, and more often that not their shining Canadian Dream becomes a veritable Canadian Nightmare.
Imagine working for pittance, juggling with a couple of jobs just to exist – not live. The much heralded MPP Cheri DiNovo's Bill150 increasing minimum wage to $10 shows a glimmer of hope. The case for this minimum wage is fully justified.
We are shocked when we read and listen to the specious arguments that it shall lead to inflation; that it shall lead to loss of jobs; that the small businesses shall be adversely affected. It is all what Shakespeare would say” all sound and fury, signifying nothing”. The arguments are contrived and lack substance. Only 29% of the labour force works for small businesses; nearly 71% works for MNCs. Then compare the proposed increase with the increase in the salaries of CEOs. In 2005, there was 38% increase in the salaries of CEOs of 100 organizations. And lo and behold the MPP salary increase is larger than a full year’s income of a minimum wage earner. The average CEO normally earns in one and a half day as a minimum wage earner earns in a full year. We have nothing against the salaries and perks of CEOs and MPPs. We only wish to stress that some principle of equity be there. It is all the more desirable especially when the corporate efforts have sky rocketed to over $ 200 billion in 2006.
The majority of people who will benefit are adults and primary breadwinners, and more specifically, women, immigrants and visible minority workers. A living wage will help approximately 1.7 million individuals work their way out of the poverty trap. Raising the minimum wage will also help people who aren’t poor, such as young adults working their way through college.
We do agree that some jobs might be lost, but it would also create jobs. Other trends and movements in the economy influence employment levels to a much greater extent than do minimum wages. A comparison of provinces with significant minimum wage increases between the 70s and 80s revealed no direct impact on employment trends for various age and gender groups. The increased corporate profits increased by more than 12% to over $200 billion last year, make a mockery of this assertion. Canadian CEOs rewarded themselves with an average pay increase of 39% to $4.3 million each.
And the experience of other places is revealing. Recent experience in the United Kingdom, where the government raised the minimum wage quite rapidly to over £5/hour (over C$10.50) resulted in no negative effect on jobs and had a positive impact on productivity.
The average minimum wage in 1976 was $2.71, equivalent to $9.14 in today’s dollars after adjusting for inflation. The federal minimum wage from 1976 would be worth in $10.19 in today’s dollars. Today, the average provincial minimum wage is only $7.32 and there is no separate federal minimum wage. The sad thing is that in fact, on average, minimum wage workers now receive an average of 20% less in real dollars than 30 years ago.
According to Hugh Mackenzie, the majority of employees getting minimum wages, based on data for the year 2000, thirteen per cent of all jobs pay less than $8 an hour — 7% of those jobs are held by employees age 25 to 64. Almost one-quarter (24%) of all jobs held by employees aged 17–64 pay less than $10 an hour — 15.7% of those jobs are held by employees aged 25–64.
Interestingly, the pay of CEOs makes the disparity more evident. The average of Canada’s 100 best-paid CEOs matched the average Canadian minimum wage worker’s annual earnings by 40 minutes after noon on New Years’ Day. An increase in the minimum wage to $10 an hour would push that back to 1:50 p.m. in the afternoon on New Years’ Day. To put that in context, Ontario’s MPPs recently voted themselves a 25% increase. The increase in MPP pay this year will generate an additional $22,000 a year. What an equitable payment.
The federal minimum wage, which set a standard for provincial minimum wage levels, was last increased in 1986 and then effectively eliminated in1996. Since then, the federal government has abandoned its leadership role in establishing a living wage for Canadian workers.
If minimum wages had increased at the same rate as real Gross Domestic Product per capita they would be an average of $12.44 today – a full 70% higher than the current average. It is no wonder many families are having trouble making ends meet and having to work longer hours just to get by. More than one in six workers, almost 2.4 million Canadians, are in low wage jobs making less than $10 an hour, according to Statistics Canada. Most low wage earners are women and many are recent immigrants. Almost half of low paid full-time workers were their family’s major income earner.
Analysis has shown that higher minimum wages do not have a large impact on net government spending and revenues – and could even have a positive impact. Higher direct costs are offset by lower spending on social transfers and by higher income and sales tax revenues.
High levels of poverty will persist in Canada unless the minimum wage is raised to a decent living wage. The frame work of salary and wages must be egalitarian in outlook. It must ensure a decent fulfillment of the needs – not the luxuries, but the basic amenities must be fulfilled. Is it asking too much?
It is incumbent on the legislators to legislate without any prevarication on this bill; it is incumbent on the corporate managements to accept it with decency and grace; it is required that the Canadian dream does not become a Canadian nightmare; it is the need of the hour. The sooner we realize it, the better it shall be for the body politic and the nation as a whole. After all who gains, if the vast majority suffers?
Prepared by
Dr. Bikram Lamba on behalf of National
Ethnic Press and Media Council of Canada. He is a political and business
strategist and is Ombudsman o the council. He can be contacted at torconsult@rogers.com.
Ph. 905 848 4205
