Should minimum wage be increased?

by tasiags on February 2, 2014 - 9:56pm

Published on January 26, 2014, the article “ ‘Working for nothing’: Canada joins global minimum wage debate” by Tavia Grant addresses the issue of the high number of workers that earn minimum wage in Canada, as well as covers some possible solutions.

Based on Statistics Canada, it has been four years in a row that one million people across Canada have been working for the minimum wage or less for a total of 6.7% of Canadians (last year). That number has almost doubled since 2000. The reasons as to why the number of low-wage workers have significantly increased since the 1990s are numerous: “a drop in private-sector unionization, free trade and globalization that increased the supply of labour, technology that is displacing low-end jobs, government restraint and the growth of traditionally low-paying jobs (e.g. in retail)”. This is problematic as it creates a huge gap between the rich and the lower paid workers, with a missing middle. It is also problematic as those low-wage workers only make enough money to pay for their increasing rent and food, struggling to make ends meet and more importantly, pay for their health problems and save retirement money. Some argue that higher wages would provide for better health, higher willingness to attend work, and more productivity.

In Canada, several policy responses have been proposed, ranging from increasing minimum wage to setting up living-wage legislation (income supplement). However, reactions diverge. While some argue that an increase in minimum wage will toughen local economies, others claim that it will hurt employment. There is no clear answer on what to do. The Canadian Federation of Independent Business states that increasing minimum wage would hurt employment. They estimate that for a 10% increase in minimum wage, more than 320,000 jobs could be lost nationally, smaller businesses would feel increased cost pressures, and students as well as temporary workers would be significantly affected. Instead, they encourage “more tax exemptions” for those with low incomes as well as an increase in “government investment in training for skilled trades”. On the other hand, the Ontario Chamber of Commerce encourages “regular increases to the minimum wage, but says any hikes should be predictable and based on clear criteria. It recommends the minimum wage be tied to inflation measures.”

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