Going for gold on minimum wages

January 20, 2010

As we prepare to cheer for our athletes during the upcoming Olympic and Paralympic games, it’s worth remembering the fields in which BC isn’t going for the gold. Ensuring that work is a guaranteed way out of poverty, for example.

It’s a little known fact, but the “the best place on earth” is now home of the lowest minimum wages in Canada.  Our minimum wage has been frozen at $8 per hour (and an embarrassingly low $6 for the first 500 hours of work) since 2001, and there is little indication that this is about to change any time soon.

The rest of Canada is getting further and further ahead of us in this particular race. Just last week New Brunswick announced that it would increase its minimum wage from $8.25 to $10 per hour over the next two years. Other Canadian provinces have recently upped their minimum wages too – and Ontario, Quebec, Newfoundland and Nova Scotia have committed to further increases in the near future.

There is much catching up to do.  

Although only 2.7% of BC employees got paid $8 per hour in 2008, a much larger group of workers – 13.4% or 253,000 people – earned less than $10 an hour.  The number of low-wage workers has likely increased considerably in 2009, when a net of 82,000 full-time jobs were lost across the province to be replaced in part by a net of 27,000 new part-time jobs.

People working full-time, full-year should be able to support themselves on their wage. But this would be difficult in BC even on $10 per hour.  A single person working 40 hours per week year-round needs to earn $11.09 per hour just to break even with the poverty line ($22,171 for those living in large Canadian cities, according to Statistics Canada).

Some economists suggest we shouldn’t worry too much about minimum wages, arguing that the majority of low wage earners are women and youth who are not “heads of households.” But this logic is based on an outdated notion of the typical family, where father brings home the bacon and is able to support a comfortable standard of living.

Families these days, especially those with children, increasingly rely on both parents’ earnings to get by.  Working poverty is a serious problem in our province and 56% of poor children in BC live in families where at least one parent works full-year, full-time.  The wages that women are able to earn have important impacts on the well-being of their families, regardless of whether their spouses are earning more than the minimum wage.

While it is true that just over half of minimum wage earners live with their parents, many of them are not teenagers.  In fact, one in ten minimum wage workers living at home with parents is older than 25.  

Rising post-secondary education fees, mounting levels of debt upon graduation, and higher costs of establishing a new household in BC combined with low wages explain the rising numbers of “children” over the age of 20 who live with their parents.  In 2006, over 44% of young adults in BC (aged 20 to 30) lived with their parents, compared to only 32% in 1986.

BC’s government says it is worried that increasing the minimum wage to $10 per hour will cost too much for businesses that rely on low paid workers and is therefore a bad idea given the hard economic times. It is worth noting, however, that the only reason why we need to hike the minimum wage by more than 25% just to reach a decent pay level for vulnerable workers is that it has remained unchanged for over eight years while the cost of living in BC – as measured by the consumer price index – increased by 15%.  

In the future, sharp, one-time hikes could be easily avoided by indexing the minimum wage to inflation to ensure that its value does not erode over time. Meanwhile, BC businesses can find comfort in the experience of their fellow entrepreneurs in the rest of Canada who are managing to turn profit while paying higher minimum wages.

The minimum wage is the protection government gives to the most vulnerable workers.  It is exploitative for this protection to be undermined by the government year after year through its failure to make reasonable increases.

Let’s set the bar high not just for the athletes, but for our government and for business too, and ensure that all workers earn a decent wage.

Iglika Ivanova is the Public Interest Researcher at the Canadian Centre for Policy Alternatives’ BC Office. Marjorie Griffin Cohen is a professor in the Department of Political Science at Simon Fraser University.