There are times when I feel that I am beating my head against a brick wall. In Canadian Business (October 10, 1997) there is a column on school drop outs. I have always supported the concept of the minimum wage, so the argument that links minimum wage to school drop outs is not new to me. When I suggested to a die-hard Thatcher supporter in Britain that a minimum wage might be a good idea, I was told quite emphatically (with expletives thrown in) that I really didn't know what I was talking about. A recent study conducted by the University of Alberta examined minimum wage and drop out rates and found that money spent directly on education with the intention of reducing drop out rates is wasted. You see, the higher the minimum wage the more chance of students dropping out of school to get a job to earn money. It is an interesting argument.
These smart fellows seem to have missed the point that business can absorb the costs of rising wages, it's part of the costs of doing business, and is a cost that they write off as pre-tax operating costs. Which is why workers are variable capital. In other words it reduces their tax rates, workers wages and benefits are already a tax write off.
Which is why the Democrats in the U.S. congress did not get sucked in by the Republicans call for a tax break for small business and finally passed the U.S. minimum wage increase.
Which got the thumbs up from Lou Dobbs!
DOBBS: The Democrats -- the House today passed the minimum wage. Hallelujah!
Of course the Senate Democats having less of a majority may still give business an unneeded break.
Lets look at booming Alberta, where the base rate for workers is now between $8-$12 an hour. Business cannot find folks to work for less than $8 an hour at the low end despite the fact that the minimum wage is $7. In fact the average wage in unskilled work such as working at a 7/11 or at a local non union food wholesaler is $9.50 an hour and companies are offering a bonus of $700 if you stay with them for 1000 hours.
Still in Alberta even at these rates the cost of living needs means the minmum wage should be $10 an hour. The cost of living is a basket of goods, rent, food, utility, school, healthcare premiums, working people have to pay. That is the basis for calling for a $10 an hour minimum wage, not that it is a 'nice round number' like some smart folks assert.
Public Interest Alberta has released a report today that shows even in booming Alberta workers making $12 an hour are having a hard time making ends meet. And while as usual the call is to increase the minimum wage to PIA's credit they call for a Living Wage, as I have done here ad nauseum.
Alberta social agencies and unions are calling on political leaders to "take off their rose-coloured glasses" and help families that are missing out on the boom.
They say it's a disgrace that 25% of Albertans are making less than $12 an hour and nearly 70,000 families are living below the poverty line in such a resource-rich province.
"There's a whole population of Albertans for whom the boom is little more than a faint echo," Alberta Federation of Labour President Gil McGowan said yesterday. "We think it's long past time our leaders acknowledge the fact that not everyone is sharing in the Alberta Advantage."
He called Alberta's $7 minimum wage "perverse."
Liberal employment critic Bruce Miller said it's hypocritical that MLAs' salaries are indexed to inflation but not the minimum wage or funding for disabled Albertans or others on social assistance. "I think it's deplorable," he said.NDP critic David Eggen said the minimum wage should be immediately hiked to $10 per hour
A study commissioned by the advocacy organization, Public Interest Alberta, says single minimum-wage earners are taking home less than half the income they need to cover living costs.
But Employment Ministry spokesman Lorelei Fiset-Cassidy said the province is not considering hiking or indexing the province's minimum wage.
She said 97% of Albertans already earn more than minimum wage and Alberta just surpassed Ontario as having the highest average wage at $21 per hour.
But Judy Cook, 50, who makes less than $12 an hour after 14 years at a department store, told the Sun it's a struggle to get by on her income.
"I'm living worse now than I ever did," said Cook, who is renting a one-room basement suite in a friend's house. "I go nowhere and do nothing because I can't afford it. I have friends and family that help me out, but it's very tough."
Bill Moore-Kilgannon, Public Interest Alberta executive director, called on the government to adopt policies that ensure that contracts are only awarded to companies that pay "living wages."
It is interesting to note that where you have higher unionization rates you have less folks working for the minimum wage. That is because unionization leads the general market to increase its wages and benefits for all workers for two reasons; to keep unions out and to keep competitve with unionized businesses. Alberta and America share something in commong, low rates of unionization, which is why the minimum wage is low.
The report demonstrates that Alberta’s minimum wage has not kept pace with inflation (now $7.00 compared to a high in 1976 of $9.50 / hour in 2005 constant dollars) and cannot be considered a living wage. It also provides the latest statistics showing that close to 25% of all employed Albertans earned less than $12/ hour in 2005. While not everyone earning less than $12/ hour lives in poverty, one in five Alberta families with children under 18 (68,700 families) earn less than Statistics Canada’s low-income cut off (LICO) before income supports.
DAVID SHIPLER: You know, Jeff Rosensweig, at Emory University, did a little calculation that showed that, for the minimum wage in 2009 to have the same purchasing power as the minimum wage did in 1978, it would have to be $9.25 an hour, not $7.25.
One problem is the decline of union membership. It's lower now than it's been since the Depression. About 12.5 percent of American workers are in unions. And in the private sector, it's only 7.8 percent, which means we almost don't have labor unions in the United States, which means that the playing field is tilted.
You know, if you have a free market, in a really free market, the buyer and the seller both have to be on a level playing field. The seller of labor now is, at the low income levels, is not on a level playing field. They can't collectively bargain.
Now, there's a bill before Congress that's been there for a while, supported by a few Republicans in the Northeast, that would facilitate union organizing in the workplace. It wouldn't cost the federal government a dime to pass this. And it would probably help a great deal and a great many people, actually.
Gee that would be great for America, and it would be great if we had progressive labour laws in Alberta, like automatic union recognition, automatic first contracts and No Scab legislation.
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