Minimum Wages

[Thorin]

Okay, so I was looking up the Alberta minimum wage to figure something out - it's the lowest in Canada at $9.40 an hour.  I was on Wikipedia and clicked a See Also link that led me to the US minimum wages: http://en.wikipedia.org/wiki/List_of_U.S._minimum_wages

Here's some that really stick out to me:

Georgia - 5 or less employees, no minimum wage; workers getting tips, $2.13
Iowa - small companies grossing less than $300k per year, no minimum
Massachusetts - workers getting tips, $2.63; agricultural workers, $1.60

There are other terribly-low numbers in there.  Remember that people also have to pay for their own health insurance out of that money.  No wonder Americans don't want to do the @%&# jobs anymore, they'd make less than Al Bundy!

[Mr. Analog]

It's a sad state of affairs, cost of living has risen dramatically but for many regions of the US the minimum wage hasn't shifted at all.

[Lazybones]

Can't remember if it was BC or Alberta but there was a similar distinction for workers service alcohol or something.

Minimum wage is very regional.... I wonder what the cost of living to minimum wage ratio is more than what the minimum is.

[Thorin]

Alberta is $9.40 per hour except for $9.05 per hour for those that serve alcohol (cocktail waitresses).

$1.60 an hour is $12.80 a day.  Keep in mind they pay their own health insurance, $300 a month or more.  $1.60 an hour doesn't even cover health insurance, even if you live in a cardboard box and eating out of dumpsters.

[Lazybones]

Alberta is $9.40 per hour except for $9.05 per hour for those that serve alcohol (cocktail waitresses).

$1.60 an hour is $12.80 a day.  Keep in mind they pay their own health insurance, $300 a month or more.  $1.60 an hour doesn't even cover health insurance, even if you live in a cardboard box and eating out of dumpsters.

Not really disputing 1.60 as ridiculous, however when speaking about minimum wage relative cost is important..

[Darren Dirt]

Not really disputing 1.60 as ridiculous

That's less than Yoda!
http://what-if.xkcd.com/3/

[Thorin]

Yes cost of living is important for relative comparisons.  New York City is unlivable on minimum wage unless you squeeze eight people into a one-bedroom apartment.  As they do.  I really can't imagine living with eight people in a one-bedroom apartment with no AC and nowhere to send the kids but out on the street.

[Lazybones]

Yes cost of living is important for relative comparisons.  New York City is unlivable on minimum wage unless you squeeze eight people into a one-bedroom apartment.  As they do.  I really can't imagine living with eight people in a one-bedroom apartment with no AC and nowhere to send the kids but out on the street.

Exactly, even places with seemingly high minimum wage could be worse to live in. There are "living wage" stats for many places that make for a much clearer picture of things...

[Darren Dirt]

When a state or province decides to force a RAPID increase in minimum wage, they don't seem to let facts get in the way...

Not just Alberta's NDP, but Ontario's Liberals.

All apparently in the name of helping mostly part-time and young unskilled workers be able to buy a little more stuff (until the price of that stuff goes up 20%, 30%, or more...


Today I found this article on the Ontario minimum wage boost (+32% over 18 months) in the unquestionably-left-leaning Huffington Post.

Middle of next year Alberta should be seeing a lot of similar articles written... and not just from the "right wing" voices either.


http://www.huffingtonpost.ca/john-laforet/wynnes-tiny-tax-cut-wont-save-small-businesses-from-15-minimum-wage_a_23290708/

"
...those small businesses that rely on minimum-wage workers as part of their business model will need to adapt by:
-Maximizing employee productivity to get more value out of more expensive employees;
-Reviewing (and adjusting) their financial plan and model to fit their new cost structure;
-Growing their sales to increase volume of work and employee utilization; and
-Adjusting pricing of products and services, if that's all there is left to do.

Absent of the resources to take an honest look at employee processes and productivity, many businesses won't be able to make educated decisions about how to maximize their workforce and will instead look at how best to cut the number of hours they staff,
Others will try raising prices in place of increasing volume and will find their better-resourced competitors eating their lunch anyways, even with improved margins.
"


A few noteable comments:


If a business fails due to the minimum wage increase then it was bound for failure long before this.


That doesn't make any sense. That's like saying "If a restaurant can't afford a 30% increase in food costs, they were bound for failure!".


A 32% increase in under 18 months is not sustainable for all small business.  Could you afford a 32% increase in your mortgage in 18 months?  Because if you can't maybe you shouldn't have a mortgage.  Your comment sounds as silly as mine eh?


I am a landlord who owns a building that houses a successful bakery and cafe.  They have been tenants for 20 years but notified me this week that they are closing because they won't be able to afford the minimum wage hike.  All those poor employees expecting a wage increase in January will now get pink slips.


The huge spike in cost of goods coming could likely counter any gain in spending. The only real winner in this is the Ontario gov through increased tax revenues.


When businesses have added expenses, the product or service they are selling goes up and/or their expenses (labourers) are decreased.
This solution will be great for a short time but will eventually go back to equilibrium when the cost of living catches back up to the increase of minimum wage.

[Darren Dirt]

Another similar HuffPo article from Dec.2014, again HuffPo
http://www.huffingtonpost.ca/charles-lammam/canada-minimum-wage_b_6257812.html

(surprising how the comments here were so skeptical of the claims/arguments even though there were links to the source studies etc... and yet the above Nov.2017 article has a lot more agreement with the same conclusion -- quickly increasing MW is the wrong solution for a legitimate problem aka "poverty". I guess during these past 3 years the mainstream media has covered some noteable related "real life tests" of help-the-poor economic policies that publicly failed, such as Venezuela and Seattle?)



"
While the aim of helping poor families is something we all want, the reality is that a minimum wage increase is the wrong policy.

It sounds straightforward: get the government to legislate a higher wage so low-wage workers earn more. Unfortunately, this oversimplification fails to account for a number of facts including who earns the minimum wage and the unintended consequences that result from minimum wage hikes.


First, most people who earn minimum wages are not the sole income earner in their household. Most are in fact young people starting out in the labour force working their first job while in school. A large share of the remaining minimum wage earners (17.4 per cent) have working spouses, meaning their household income is higher than what a single minimum wage would provide.

This basic data on minimum wage earners helps to explain why academic studies consistently find that minimum wage increases do not reduce poverty.

The economics of studies is relatively straightforward. When governments impose a minimum wage higher than what would otherwise prevail and without corresponding productivity increases, employers find ways to operate with fewer workers. While the more productive workers gain through a higher wage, their gain comes at the expense of others who lose as a result of fewer employment opportunities. Young and low skilled workers are most adversely affected since they possess less job qualifications and experience.

In the end, minimum wage hikes rob young people of the opportunity to gain work experience that helps them develop basic skills and earn higher levels of income.
"

[Thorin]

If you want to have a discussion about this, maybe start by posting your opinion and supporting info, instead of just posting comments from links? I mean, when you just post comments from others like this, it's been my experience that no matter what opinion I state, you then argue the other side...

[Tom]

Yeah, I'd like to make some comments, but I'd feel it'd be like talking into the void.

[Darren Dirt]

I thought my position was clear from the beginning of both of my posts.

I am open to claims and policies being pushed if there is testable repeatable evidence backing it.

I have read the GoA's webpage and skimmed its links in support of a rapid increase to MW. It seemed less facts and more promises so was less than convincing but whaddaryagonnado.

Then yesterday unexpectedly found a HuffPo article dated that day about MW. It was related to Ontario but similar, only it was dealing with a reality and most of the comments were not in favor of what the Ontario government was doing... which surprised me because HuffPo is very left leaning so the lack of pro-MW-boost comments was noteable imo.

Both of the HuffPo articles linked have sources for their opinion. I skimmed them as well and they seem to me less speculative and anecdotal than the government justifications.

Would you like me to find the provincial governments' webpages that have plenty of links on the pro side? Those are easy to find, unlike a con side on a left leaning media site hence my share.

[Tom]

What is the percentage increase on the ab minimum wage per increase? I'm pretty sure they've been doing it in steps.

That said, if you're paying your workers purely minimum wage, you really don't respect your people. it is NOT a living wage.

[Mr. Analog]

The trouble I have with a lot of US journalism (and online echo-chambers) is that they'll both pull stats for inflation and minimum wage, so-called "living wage", cost of living per region (etc) and draw completely polar conclusions (for reference see any discussion on Seattle's local economy ever). At the core though is this question;

Is it possible to survive on minimum wage alone?

General minimum wage in Alberta is (as of Oct 1, 2017) $13.60/hour, now assuming a person can even get a full 40 hours a week that means $544/w, or $28,288.00/a but this isn't take home of course.

Of that $544 per week...

Federal tax: $39.77
Provincial tax: $15.21
CPP: $23.60
EI: $8.87

Total deductions: $87.45
Net pay: $456.55 (per week)

Again, this all assumes a steady, 40 hour a week minimum wage job.

According to this CMHC article, (in 2013 at least) the average rent for a single bedroom apartment in Edmonton was $897/month, so there's two weeks income. Is a vehicle needed? Are there any dependents? Are there credit card bills to pay? Any savings at all??

Maybe after all that it is possible to barely squeak by, but all it would take to end up on the street is to lose the job and not find work for a few weeks. No savings, no credit, no nuthin'

IMO that's a precarious place for anybody to be in...

[Tom]

Good luck getting 40h/week on minimum wage. Plenty of places will over hire so they don't have any "full time" staff and don't have to pay any benefits. So now add on less take home, more travel (multiple jobs?), and having to pay more for health care.

[Darren Dirt]

If minimum wage was intended to pay for a family of 2 adults and multiple kids it would be a very different economic (and political) world that exists.

That is what training and skills are for -- better compensation for more valuable work.

Unless the minimum wage goes up to $40/hour -- then everybody can be a single income family again ...yay... until every business has to reduce hours or raise prices or go under... boo...

Even the stats linked from the GoA policy promotion webpage reveals how small a % of minimum wage earners are single parents. Something like 20%. Most are either young adults, students... and almost always a secondary income in the household -- which is sadly needed as the state grows decade by decade providing more and more unsustainable expensive programs; that's the actual problem not so called "greed" of business owners like Trudope tries to claim as he punishes doctors and other professionals who are trying to build something of value.

[Thorin]

I thought my position was clear from the beginning of both of my posts.

Well, what I saw was a couple of posts with links and then quotes of comments by others from those links without any opinion from you.

Then yesterday unexpectedly found a HuffPo article dated that day about MW. It was related to Ontario but similar, only it was dealing with a reality and most of the comments were not in favor of what the Ontario government was doing... which surprised me because HuffPo is very left leaning so the lack of pro-MW-boost comments was noteable imo.

[..]

Would you like me to find the provincial governments' webpages that have plenty of links on the pro side? Those are easy to find, unlike a con side on a left leaning media site hence my share.

So you shared it not because of a particular opinion of yours but because you were surprised that a particular website presented a particular opinion?

So, you posted it to point out that someone had a different perspective than you expected?  Doesn't seem like it would further the discussion in any meaningful way...

Trudope

Name-calling will kill every civil discussion or debate.

[Thorin]

It might be worthwhile to see what actual experts on macro-economics think.  I'm a numbers guy, very analytical, and I like looking at this kind of stuff, but I'll be the first to admit I'm not an expert and there are probably many factors I'm missing.

The obvious factors that I do see:

In the 60s, minimum wage as a percentage of average income was higher than in the following decades, meaning that minimum wage earners had more purchasing power than they did in the 70s, 80s, and 90s.  In the 00s, minimum wage as a percentage of average income started going back up, meaning that minimum wage earners were finally recovering the level of purchasing power they'd last see in the late 60s.  Anecdotally, I see this in my kids being able to buy things with less hours worked than I did when I was a kid.

Minimum wage is required to counter the natural greediness of employers.  An employer naturally wants to pay as little as possible for anything, as that will then increase their profit potential, and profit is the reason companies exist.  Many of the complaints about minimum wage are from employers, of course they are, they think their profits will be affected.  The same outcry came out against the idea of freezing or cancelling the Temporary Foreign Workers program.  Never mind that companies were abusing the TFW program to get cheaper labour than they could get in the local labour market, thus increasing their profits at the cost of employment for local workers.  Anecdotally, the McDonalds owner here in town threatened that he would have to close his restaurants at slow hours if he was forced to hire local workers at local rates.  Everyone laughed at him, because it's pretty well known that he's making upwards of a million a year per McDonalds (there's four).

Inflation is a fact of life in our economy because that is the style of economy we have chosen to follow.  Every year, there is more money created than destroyed, thus each dollar becomes less valuable.  Canadian governments have acknowledged this, and income tax is generally indexed to inflation now.  What I mean by that is if you don't get a raise you will pay less tax next year than this year because the credits etc will be raised by the same amount as the inflation for the year.  And if you get a raise that is equal to the inflation for the year, then you will have the same purchasing power as you did the year before.  This is generally called a cost of living increase.

As for benefits with "full-time work" (aka forty hours per week), there is nothing enshrined in law that says an employer needs to give you anything more beyond minimum wage and four percent of your income as vacation pay (or two weeks off), extra pay if they make you work more than eight hours a day, and extra pay if they make you work on one of the nine statutory holidays (nine in Alberta, differs in other provinces).  Employers that over-hire typically do so in order to avoid paying any workers overtime even if a couple of workers get sick or quit.

Tom, you're right that there are employers that really don't respect their people.  These employers are trying to maximize their profits, not their workers' life enjoyment, and workers are right to unite and demand better wages and working conditions.  As a worker that bothers me, but if I were a business owner I'm sure I'd be on the other side of the coin.  It's a natural tension that we'll never get away from.

Companies large and small have seen many tax cuts over the last several decades because of constant calls of not being able to thrive due to too many and too high of costs (taxes, wages, materials, etc).  On the one hand, paying 78% of income in taxes truly is a burden.  On the other hand, small business are now at 0% to 3% in income taxes.  Maybe it's just owners being naturally greedy?

My opinion?  I'm glad that minimum wage earners are seeing their long-eroded purchasing power restored somewhat.  I know that the increase in minimum wage will be reflected in goods bought from companies that use minimum-wage employees, but I'm sure based on previous experiences that we'll barely notice the difference as it will be gradual and not as much as business owners are trying to convince us of.  Many of the smaller business owners, doctors, lawyers, fastfood franchisees, use every loophole possible to pay as little tax as possible.  When comparing them to workers with similar assets and life activities (kids in sports, vacations, etc), said business owners are paying less tax already.

Anecdotally, I've seen doctors with $2mil in billables, $1.2mil in expenses leaving $0.8mil in profits that then pay less tax than a worker making $80k (or $0.08mil, or one-tenth of what the doctor makes), because the doctor knows to put everything through the business as much as possible, in order to pay for their assets and life activities with pre-tax dollars.  Is that "greed"?  Yes.  Is it natural?  Yes, I'd do the same in the same situation.

And I need to address what you said in your last post, Darren, about "a secondary income in the household -- which is sadly needed as the state grows decade by decade providing more and more unsustainable expensive programs".  It's not the government that is causing my cost of living to increase, it's the greedy business owners that want more and more profit.  It is not the government that says cars will now cost more, a note from the doctor will now cost more, etc.  It is the business owners (both large like car companies and small like doctor's offices) that want to increase their profits and thus charge us more.

[Mr. Analog]

Well said Thorin, bravo!