OVERVIEW: A Fair Minimum Wage For Workers
Opponents of a fair minimum wage often try to perpetuate myths about who earns minimum wage — they try to portray minimum wage earners as well-off teenagers, living at home with their parents with no bills to worry about, working for ‘weekend fun’ money at small ‘mom and pop’ stores that can’t afford to pay higher wages.
The facts, however, don’t bare out this imaginary scenario. Most minimum wage earners are adults who depend on their earning to support themselves and their families.
Some Facts For You
Here are some facts about the minimum wage you may not know:
- Two thirds (66%) of minimum wage earners are adults, age 20 or older.
- Women make-up the majority of minimum wage earners (60%). This contributes to much higher incidents of women living in poverty, and worsens Manitoba’s serious child poverty problem.
- Only 40% of minimum wage earners are students, many of whom work more than one job to pay tuition and manage student debt.
A Minimum Living Wage Guarantee
The NDP government deserves strong credit for implementing 16 straight annual increases to the minimum wage. Having a minimum wage is about fairness, and regularly increasing the minimum wage is key way in which government can protect our society’s lowest income workers.
In fact, the minimum wage in Manitoba has increased by over 80% from $6.00 / hour to $11.00 / hour since 2000, more than double the rate of inflation over the same period. The result of this progressive government policy has been an increase in the purchasing power of low income workers over time.
- 43% of minimum wage earners work full time, and 27% of minimum wage earners are post-secondary graduates.
- The majority of minimum wage earners work for larger employers, rather than smaller ones: 71% work for firms with 20 or more employees; 53% work for firms with 100 or more employees. Most small businesses appear to understand the value of paying more than minimum wage to retain staff and boost productivity.
- Just over half (51%) of minimum wage earners have been in their same job for a year or more and are still making the minimum wage, suggesting that the only raises they can count on are increases to the minimum wage.
Source: Statistics Canada data provided by the Manitoba Department of Labour
This contrasts sharply with the experience of the 1990s under the PC Filmon government, when minimum wage did not keep pace with inflation, resulting in low income earners actually losing purchasing power.
But a better approach to setting minimum wage is still needed. Even at $11.00 / hour, tens of thousands of low income workers are still left living below the poverty line in Manitoba. That’s because today’s minimum wage is too low to allow workers to escape poverty, even when they work full time. Today’s minimum wage is a poverty wage. It’s not based on any estimate of the cost of living.
Manitobans who work full time at their jobs should be able to earn a decent living wage – a wage that at least allows them to meet their basic needs, not one that traps them in poverty. As a province with one of the strongest performing economies in the country, we need to set the minimum wage to lift low income workers out of poverty. It`s a simple matter of fairness. Working families deserve to benefit from their hard work.
In recent months, a coalition of community, labour and anti-poverty groups have come together around a call to raise the minimum wage to a living wage.
By raising the minimum wage (over a reasonable transition period) to Statistics Canada’s low income cut off (LICO) level of $15.53 / hour, all workers would at least be raised to the poverty line, instead of living below it. While there are many different ways to measure poverty, LICO is a well-established and widely recognized approach to estimating low income cut-offs, and it`s updated regularly by Statistics Canada. Anchoring the minimum wage to LICO will provide a predictable basis for workers and employers to plan for the future, helping working families to make ends meet, and supporting employers with a more productive workforce, with less staff turnover.
Workers at the bottom of the wage scale also spend virtually all of their income in the local economy, so when they earn more, they spend more, and that’s good for business and the economy as a whole.
It will also provide government with a more transparent and less arbitrary approach to raising the minimum wage, grounded in sound statistical calculation to ensure working families don`t have to live in poverty. The Working Families Manitoba campaign calls on all political parties to commit to setting a living wage as the minimum wage.
WHERE THE PARTIES STAND
So far, none of the political parties have committed to raising the minimum wage to a living wage. However, there are large differences in what the parties have said on the subject. The Working Families Manitoba campaign encourages all parties to use their election platforms to commit to raising the minimum wage to a living wage.
Here’s where the parties stand so far:
So far, the PCs have made no commitments to establish a living wage or even raise the minimum wage by any amount whatsoever. We hope the PCs will have more to say on this as the election draws near.
In response to previous increases in the minimum wage implemented by the NDP government, Brian Pallister has expressed his view that when minimum wage is raised too aggressively, it reduces the number of entry-level jobs. (WFP, June 18, 2014).
The PCs have proposed lowering taxes as their solution to raising the disposal income of low income earners, an alternative often put forward by corporate interests. Specifically, they’ve pledged to:
- increase by $1,000 the ‘Basic Personal Exemption’ (BPE) amount, which is an amount subtracted from an individual’s total income for the purpose of calculating income tax; and,
- index tax brackets, which shelters individuals from paying taxes at a higher rate when their incomes rise.
But neither of these tax measures are specifically targeted to low income earners (they apply to all tax filers), and together, they would divert tens of millions of dollars away from public services that families – especially lower income families – depend on.
Let’s compare the effects of raising the minimum wage vs. increasing the BPE:
- A minimum wage earner working full-time earns just under $23,000 at the current minimum wage of $11.00/hour. A $1,000 increase in BPE reduces that worker’s income taxes by $108, while costing the provincial treasury $72.8 million/year. Moreover, just 10% of the benefit from that BPE increase goes to minimum wage earners.
- By contrast, an increase to the minimum wage of just $.50/hr provides that same worker with $701 in additional income (after provincial income taxes are deducted). That’s almost 7 times the benefit provided by the $1,000 BPE increase, and it does so without depriving public services of resources.
The reality is that when compared with increasing the minimum wage, increasing the BPE provides significantly less benefit to minimum wage earners at a massive cost to the provincial treasury that ultimately puts major strain on the public services that low income earners depend on disproportionately. The PCs’ second pledge – to index tax brackets – would cost the provincial government a further $14.2 million, while providing no benefit at all to minimum wage earners.
Source: Manitoba Finance
Since coming to office, the NDP government has increased the minimum wage every year – that’s 16 increases in all, totalling $5.00 (from $6.00 / hour in 2000 to $11.00 / hour today). Minimum wage has increased by over 80%, more than double the rate of inflation over the same period, providing low income earners with a significant increase in purchasing power.
The NDP has also consistently rejected calls from some corporate interests to establish a two-tier minimum wage.
In response to calls to raise the minimum wage to a living wage level, the NDP has indicated it agrees with the principle that the total income of all families should be raised above the poverty line. In its more recent Throne Speech, the NDP government said: “Together with community partners, such as Make Poverty History Manitoba, we will take steps to increase the minimum wage and bring the incomes of all Manitoba families above the poverty line so that all Manitobans can live with dignity and fully participate in society.” It remains unclear whether the NDP is committed to a standalone living wage for all workers, or whether it favours government income support programs as a means up topping-up the minimum wage. In either case, the NDP has yet to layout a clear timeline for raising families out of poverty.
While we support government efforts to raise the incomes of low income people, we encourage the NDP to clearly commit to a living wage as the minimum wage so that people working full time can earn enough income to escape poverty.
Like the PCs, the Liberals have made no promises to increase the minimum wage by any amount, at this stage.
However, like the NDP, the Liberals have raised the concept of a minimum level of total income to raise families out of poverty. Specifically, the Liberals have proposed to launch a pilot study/project (modeled after a similar study/project that was carried out in Dauphin, Manitoba during the late 1970s) wherein government (not employers) would guarantee all families a “minimum level of income”.
The Liberals have suggested they expect to see improvements in population well-being as well as significant savings to government in the form of reduced health care and justice expenditures. No details have been provided on the level of “minimum income” to be provided, how many families might be included in a pilot project, what the pilot project would cost government, and whether a Liberal government would extend the pilot province-wide if deemed successful.