A new research report by the Atlantic Institute for Market Studies (AIMS) argues that a minimum wage isn’t representative of the worth of jobs at that salary. Its authors also say that minimum wages negatively impact people with few skills by limiting access to a job and experience.
We wonder how AIMS determines the value of a low-skilled employee. It seems the research institute didn’t find it pertinent. Yet the purpose of a low-wage job isn’t to gain experience, but to ensure a salary sufficient to provide for oneself.
AIMS bases its assessment of poverty on the number of people earning minimum wages and living in low-income housing. Such a measurement paints an inaccurate picture, considering that a lack of affordable housing forces low-wage workers to live beyond their means. The cost of housing can represent more than 50 per cent of a low wage worker’s salary.
According to the 2016 Housing Needs Assessment by Moncton and Dieppe,“Housing is considered affordable if households spend no more than 30 per cent of their gross income on housing costs.... A total of 89.5 per cent of all Moncton households with incomes in the lowest income category were spending 30 per cent or more on housing costs and 73.7 per cent were spending 50 per cent or more of their income on housing costs.”Similarly, a single person earning the minimum wage in New Brunswick can only purchase 60 per cent of a healthy food basket.
It’s also wrong to say young people don’t need money. Some have a job because their family doesn’t support them financially or because of specific socioeconomic conditions. We can’t assume people don’t need their salary to survive.
For employers to have employees, those employees must be able to provide for themselves. Therefore, by eliminating minimum wages, the salary of those employees would diminish and government would have to provide more services to compensate. Such is the case in the United States, where Walmart employees cost $6.2 billion in social welfare to American taxpayers because the minimum wage in certain states isn’t high enough to meet their basic needs.
According to the AIMS report, a minimum wage job shouldn’t be considered as permanent in one’s career, but as a transition to a better job. Yet the fact sheet on minimum wage in New Brunswick shows that 65.9 per cent of the low-wage jobs turn out to be permanent.
The minimum wage isn’t only good for the workers – it’s also good for the economy. According to Armine Yalnizyan, an economist with the Canadian Centre for Policy Alternatives, increasing the minimum wage to $15 an hour would improve the salary of 33.7 per cent of Atlantic Canadian workers. Such a measure would increase demand for goods and services. What a good way to stimulate a slowing economy.
Yalnizyan also mentions another advantage to increasing the minimum wage: better staff retention. By earning a decent salary, employees are more likely to stay with the company and offer better services. By diminishing the turnover rate, the employer also reduces his training costs.
As a solution, AIMS suggests letting the labour market take care of the working conditions. Let us remember the awful industrial era, when the labour market set the working conditions. Parental leave, security at work, vacation time and reasonable working hours were all gained by workers who fought for centuries for better work conditions, to have a happy life.
Do we really want to go backwards?
Catherine Roy Comeau and Maxime Dubé are researchers with the New Brunswick Common Front for Social Justice Inc.