Friday, 12 June 2015

Fear of Fifteen

As the "Fight for $15" continues, I hear a lot of scary stories from people in my part of the world. They are afraid of so many things. Mostly, I think, they are afraid of change. After all, this is a province that elected the same government for nearly 44 years, and before that, one party was in power for 36 years.

I hear anecdotes from people who base their opinions on stories about this and that. For instance, an article mentioning three restaurants that shut down in Seattle was proof that minimum wage increases led to job loss, despite the fact that the restaurant owners in question had named other reasons for their demise, and one specifically stated it was nothing to do with wage increases. I guess a personal story is easier to relate to.  It has power. It is easy to understand. It doesn't require looking at facts or statistics. Because, to quote former premier Jim Prentice, "Math is difficult." There are a few books out there on this topic, for instance Dan Gardner's Risk:The Science and Politics of Fear

But anecdotes are not evidence. 

Source: Doucouliagos and Stanley (2009)
I prefer to look at statistics and research when trying to decide what to believe, especially when it comes to the potential effects of government policy. Dozens of studies going back decades have found that an increase in the minimum wage does not lead to job loss. A recent study looked at employment in the restaurant sector in the U.S. over a 16 year period, comparing employment in 1381 counties. The study found no employment effects of minimum wage increases. In Britain, 140 studies have shown the same thing.  Meta-studies (“studies of studies” that pool the results of a large number of research papers)  found that that minimum wage increases had little to no effect on employment and one worldwide study even found that minimum wage increases led to increased employment.

B.C. froze its minimum wage for 9 years. When it raised it in May 2011, the Fraser Institute claimed that would lead to over 52,000 job losses- a 16 per cent decline in employment. Completely wrong. Instead there was a 1.6% decrease in employment for people aged 15-24. At the same time, 1.1% of that age group went back to school, which they should have done anyway.

Governor of New York Andrew Cuomo recently stated that a low minimum wage actually results in tax-payers subsidizing the fast food industry. Because fast food workers cannot live on their income, they need food stamps or turn to social services for income assistance. Because they are poor, they are far more likely to be sick and use Medicaid or in Canada, public healthcare services.

There is a lot of misinformation about who minimum wages earners are. The stereotype is that they are teenagers who don't really need the money. In reality, most minimum wage earners are are full time ethnic minority women who live on a wage that puts them below the poverty level.

In the minds of some, the working poor are lazy good-for-nothings. They are poor because they deserve to be. They don't understand what work means. Some of these people will tell you that minimum wage jobs were never meant to be full time permanent jobs. They were meant to be entry level jobs that would encourage people to work harder and get better jobs. Yet minimum wage employees do important work. Society relies on them to serve us coffee and ring up our groceries and take care of our kids and our aging parents, to say nothing of the working poor outside of Canada who grow and package our food and manufacture most of the goods we own. These people are far from lazy. 

In real terms, the minimum wage in Canada has only increased by one cent since 1975 while the wages of the people at the top steadily escalate. Income inequality is increasing dramatically, especially in Alberta. Especially for women. In Alberta, the top 10% of tax-filers in 2012 made 50.4 of all the income earned in the province. In a province where the CEO of an agricultural company makes over $23 million a year and the president of the U of A makes more than 1.1 million in compensation (all the while saying "the university can't withstand more cuts"), in a country where a hockey player makes over $16 million, I have to wonder why anyone resents their Timmy's clerk making over $19,000 a year.

Our minimum wage in Alberta is $10.20/hr (liquor servers $9.20)- the richest province in the country, with one of the lowest minimum wage levels. While only 2% of wage earners make minimum wage, nearly 300,000 Albertans make less than $15 an hour.  That is not a living wage. If raising the minimum wage doesn't lead to unemployment, it does lead to one thing. It leads to a better life for the poor.

And a better life for the poor is good for everyone.