Low minimum wages keep workers in poverty, report warns

Mar 26, 2007 Article Tools

OTTAWA - No province has a minimum wage high enough to lift the income of even a full-time worker above the poverty line, an economic think-tank says in a report released today.

The report, by the Canadian Centre for Policy Alternatives, calls for an immediate increase in minimum wages to $10 an hour, which it says would lift the income of a single person working full time to just above Statistics Canada's 2005 pre-tax low-income cutoff of $20,778.

And it says minimum wages should then be adjusted annually to keep pace with increases in the cost of living.

Such a move would help, not just the 4.1 per cent of workers earning the minimum wage or less, but also the nearly one if five who works for less than $10 an hour, it said.

Further, nearly half of those low-wage workers are over 25, not merely teenagers as minimum wage critics often suggest, it added.

" It's also about families trying to get by," it said.

" Provincial governments have allowed minimum wages to be eaten away by inflation over the past 15 years to the point that leaves a minimum-wage workers with an income anywhere from $4,000 to $6,000 blow the poverty line," the report says. "Low-paid workers are overdue for a raise."

" Indexing minimum wages to inflation would stop governments from playing political football with peoples' livelihoods," said Hugh Mackenzie, a research economist at the left-leaning think-tank, and a co-author of
the report.

" It would ensure the real value of minimum wages is never allowed to erode to such indefensible lows again."

Earlier this month, Ontario, after a long highly publicized debate, announced it would increase its minimum wage from $8 to $10.25 by 2010, arguing a more rapid increase would result in substantial job losses.

However, Mackenzie dismissed that concern, saying historically the minimum wage has had little impact on employment levels.

Raising the minimum wage will, among other things, allow good employers, who pay or want to pay the minimum wage, compete with firms that don't, it added.

A poll, the centre recently released, indicates nearly 90 per cent of Canadians feel raising the minimum wage would be an effective way of reducing what research, including by Statistics Canada, has shown to be a growing gap between rich and poor.

A $10 minimum wage, which based on 2005 dollars would be $10.42 in inflation adjusted dollars this year, would also meet the moral standard of providing a wage that covers the basic costs of living, it added.

The report notes that before governments allowed inflation to deeply erode their minimum wages, they came very close to what in today's dollars would be close to slightly above $10.

That also shows raising the minimum wage to $10 is "doable," it said.

The minimum wage in 2005 ranged from a low of $6.30 in New Brunswick and in Newfoundland and Labrador to a high of $8 in British Columbia.

Current general minimum hourly wage across Canada

Alberta: $7
British Columbia: $8
Manitoba: $7.60
New Brunswick: $7
Newfoundland: $7
Northwest Territories: $8.25
Nova Scotia: $7.15
Nunavut: $8.50
Ontario: $8
Prince Edward Island: $7.15
Quebec: $7.75
Saskatchewan:$7.95
Yukon: $8.95

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Eric Beauchesne