Further to issues discussed in this post, this week's Calgary Herald column from yours truly explores the debate over minimum wage following the government's decision to freeze the wage here in Alberta:
...[Edmonton Tory MLA Naresh] Bhardwaj was expressing his concern over the decision to freeze Alberta's minimum wage at $8.80 an hour.
He wondered why the recently introduced policy of indexing the minimum wage to average weekly earnings was abandoned, and pointed out that other provinces are increasing their minimum wage.
Of course, any policy, regardless of its age, should be reassessed if it no longer makes sense. Moreover, policy decisions should be based on facts, not based on a tally of what's being done elsewhere.
However, it is certainly true that this month's decision to freeze the minimum wage is an abrupt policy shift.
In March of 2008, in announcing the new policy, Premier Stelmach declared that it would "ensure that minimum-wage earners share in Alberta's continuing economic prosperity."
The following March, when the minimum wage was increased to its current level, the government boasted that minimum wage earners would be "as protected as possible during these changing times”
Now, though, in announcing the wage freeze, the government is telling us how this decision will protect jobs and help keep small business viable.
That severely undercuts the rhetoric from 2008 and 2009, and would seem to be an admission that minimum wage increases are indeed a threat to jobs and a threat to small business viability.
Perhaps the government's proposed all-party committee review can examine the question of whether we need a minimum wage.
The ostensible purpose of having, and then increasing, a minimum wage is to "help" those holding low-skill, entry level jobs.
In order to accept the premise that they are being "helped", one must look solely at wages: going from $8 to $10-an-hour, for example, would indeed appear to be an improvement.
However, if that increase has been forced upon your employer, and your employer's earnings are stagnant or worse, where is that increase going to come from?
It may mean that positions are cut, or that hours are reduced. It might mean that benefits are trimmed or training opportunities eliminated.
If you go from 40 hours a week at $8 an hour, to 30 hours at $10 an hour, simple math tells you that you've actually just received a pay cut. Factor in lost benefits and/or on-the-job training and it's hard to see how you've been "helped".
Of course, another way an employer would cover the cost of a mandated wage increase would be to simply raise prices. So now the employee working fewer hours (assuming he still has a job) and earning less now has to pay more for goods and services.
As the late Ronald Reagan so aptly put it, "The nine most terrifying words in the English language are, 'I'm from the government and I'm here to help.'"
The negative impact of minimum wage policy can be seen through the research on the subject.
As the Fraser Institute has pointed out, a major review by two economists of more than 100 studies from 20 countries found that the "overwhelming majority" consistently show decreases in employment stemming from minimum wage increases.
As we all know (or should know), it is the marketplace which determines the value of certain skills, and therefore the value of certain jobs.
If we really want to help those with few skills, and therefore what is likely to be a low-paying job, then we ought to find ways of helping those people make themselves more marketable. Minimum wage increases do nothing to help in that capacity, and may actually accomplish the opposite.
Unfortunately, it's easier for politicians to simply mandate a higher minimum wage and bask in the glory of being the perceived champion of the working class.
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