The Minimum Wage in Canada
The benefits of paying people decent wages are abundantly clear. Just as the Union Advantage puts extra money into workers pockets to spend locally, higher minimum wages increase the demand for local goods and services.
Unfortunately, in many provinces, minimum wages are set using vague, inconsistent and unaccountable mechanisms. They are left to stagnate for too long, pushing people and families into poverty before pressure builds and governments are forced to take action.
A generation ago one full-time minimum wage job was enough to keep someone above the low income line in a large urban area. This has not been the case for some time.
But there is a better way. A transparent process, with gradual and predictable increases in the minimum wage is better for everyone.
This timely CLC paper reviews the demographics of minimum wage workers in Canada, reviews the methods that provinces use to determine minimum wages, and makes concrete policy recommendations. Check out the introduction below and download the entre PDF for a longer read.
Introduction
One Canadian policy that regularly requires alteration in order to remain relevant is the minimum wage rate. Constantly evolving economic and social factors prevent the minimum wage rate from being set and remaining in place for decades. Instead, the rate must be reevaluated and adjusted to reflect the current financial needs of Canadians. However, deciding what workers are entitled to as a base wage is not easily determined. What standard of living can be achieved, what is economically sustainable for businesses, and many other questions play a significant role in determining what should be viewed as a fair minimum wage.
The intention of this paper is to break down the minimum wage debate, so that the benefits of paying workers decent wages become clear. A profile of minimum wage workers will show that the stereotypical teenage employee is not the reality and many individuals are struggling to provide for their families on minimum wage incomes. Common concerns about increases to the minimum wage, such as a rise in unemployment rates, the financial impacts on small business, and alternative policy changes to address poverty will be discussed in order to break down the myth that an increase to the minimum wage will have detrimental economic impacts.
This paper also contains a section with a special focus on the main employer of minimum wage workers, large firms. Recent examples of minimum wage job advertisements, as well as academic studies on the impacts of large employers on local economies, will be used to demonstrate the significant role these employers play in keeping wages low. Some communities have already recognized this and their strategies to impose better wages on large firms will be examined.
Our end goal is to portray the inadequacy of the minimum wage in Canada, and prove that an increase for these workers is a policy change that helps everyone. Current legislation has demonstrated its incapability to provide Canadians with a decent wage, so alternatives need to be considered. The regulations surrounding setting a minimum wage rate in each province and territory will be compared, to expose the lack of accountability. Together all of this information, leads to the conclusion that our minimum wage system needs serious reform in order for it to serve the real needs of Canadian workers.
What is a Minimum Wage?
The minimum wage is a provincial and territorial labour standard that ensures all workers receive a base wage. In some provinces and territories it has been in place since as early as 1918. Legislation, usually the province’s Employment Standards Act and Regulation (although the name can vary slightly), establishes a floor wage that must be provided to all covered employees. While an employer may chose to negotiate wages above the minimum they legally may not provide a lesser wage. The purpose of this legislation is to protect Canada’s most vulnerable workers from exploitation and prevent them from receiving dismal wages for their labour.
Since the applicable legislation is provincial, all Canadian workers are not entitled to the same minimum wage rate. As of September 2014, the minimum wage ranges from $10.20 per hour in Alberta to $11 an hour in Nunavut. Not all employees are entitled to the minimum wage. Most provinces have provisions in their legislation which exempt specific workers from the protection of a minimum wage, but it varies by area. For example both Saskatchewan and Manitoba allow individuals with disabilities to be paid lower than the minimum wage if a permit has been issued. Other individuals will remain covered but are subject to a different minimum wage specific to their profession or experience level. British Columbia, Alberta, and Ontario all have lower minimum wages for employees responsible for serving alcohol. A similar provision occurs in Quebec, although it applies to all workers who regularly receive gratuities in the workplace.