Wednesday, August 29, 2012

Brad Wall's Saskatchewan Will Have LOWEST Minimum Wage In Canada On September 1

 The following article is co-written by Larry Hubich, President of the Sask Federation of Labour and Erin Weir, Economist and President of Progressive Economic Forum. It appeared in the September August 29th edition of the Regina Leader-Post:

"Recent Saskatchewan government news releases trumpet record numbers for wholesale trade, building permits and exports. But as Labour Day approaches, we should consider that many Saskatchewan workers do not share in the prosperity they create.

In particular, our province soon will have the embarrassing distinction of Canada's lowest minimum wage. On Sept. 1, Alberta's hourly minimum rises to $9.75, leaving us last at $9.50.

Our province should aspire to have Canada's best minimum wage. Specifically, we propose phasing in a minimum wage of $11, which would match Nunavut as the highest of any province or territory. The government should index this to inflation to help protect low-income earners from having their buying power eroded by Saskatchewan's rising cost of living.

Some of the benefits of a fair minimum wage are obvious. It means more much-needed income in the hands of low-paid working people. Increasing the wages of workers at the lowest end of the income spectrum would also add to consumer spending in the province, helping local businesses and other participants in the economy.

More than any other group, low-income earners spend their money in their communities. For example, they're far less likely to make foreign investments or to travel abroad. Increasing Saskatchewan's minimum wage would bolster the provincial economy.

Of course, opponents of a higher minimum wage argue it would reduce employment. Ironically, the same conservative politicians and business lobbyists who characterize employment as being vulnerable to any improvement in the minimum wage often brag about the strength of Saskatchewan's job market and complain about "labour shortages."

Better wages would encourage more people to enter the workforce.

Claims that minimum wages reduce employment have no empirical support. Economics professors from the universities of Massachusetts (Amherst), North Carolina (Chapel Hill) and California (Berkeley) recently compared adjacent U.S. counties in states with different minimum wages. They found "strong earnings effects and no employment effects of minimum wage increases." In other words, boosting the minimum wage succeeded in raising pay without reducing employment, even when neighbouring jurisdictions kept a lower minimum.

We know from our own history there is no contradiction between a strong minimum wage and a strong job market. During Allan Blakeney's premiership, Saskatchewan had Canada's highest minimum wage and lowest unemployment rate.

But even if raising the minimum wage cut employers' demand for labour, it would still benefit employees. The vast majority of minimumwage work is in areas like fast food and retail, which have variable shifts and hours. If employers want less labour, they cut back hours rather than laying off workers.

We propose to phase in a 16-percent increase in Saskatchewan's minimum wage.

In reality, a fast food restaurant likely would require the same amount of labour because it could not substitute robots or other capital equipment for workers.

But for argument's sake, imagine the restaurant responded by cutting paid hours by 16 per cent. Its employees would still earn the same total income as before and gain more free time, with the wage increase offsetting the decrease in hours worked.

Opponents of a higher minimum wage cannot get away with simply suggesting it might somehow slightly reduce demand for labour at the margin. They would have to prove that paid hours would fall by a larger percentage than the increase in wages. And that is not what the evidence indicates.

While bragging about the relative strength of our labour market, the government is letting every other Canadian province and territory surpass our minimum wage. Restoring Saskatchewan to a position of leadership would benefit those who most need a raise and strengthen the wider provincial economy."

Larry Hubich is president of the Saskatchewan Federation of Labour and Erin Weir is president of the Progressive Economics Forum.

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