Response to the report of the Atlantic Institute for Market Studies regarding their recommendation to eliminate the minimum wage

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July 31st, 2017
Response to the report of the Atlantic Institute for Market Studies regarding their recommendation to eliminate the minimum wage

Moncton – The NB Common Front for Social Justice Inc. did its homework and analysed the research report published, this month, by the Atlantic Institute for Market Studies (AIMS).

The AIMS main argument consists in saying that a minimum wage is not representative of the worth of jobs linked to that salary. In fact, minimum wage would negatively impact the career of young people and employees with few skills by limiting access to a job and, consequently, their chance of gaining experience. According to the AIMS, the skills of those workers do not correspond to the worth of the current minimum wage.

First of all, the Common Front for Social Justice wonders how AIMS determines the worth of the salary of a low-skilled employee. It seems the research institute did not find pertinent to determine that important factor which, nevertheless, is at the heart of the study. The purpose of a low-wage job is not to gain experience but to ensure a salary sufficient to provide for oneself.

We also want to point out that the AIMS analysis does not show a realistic picture of the situation of low-wage workers. In fact, the AIMS bases its assessment of poverty on the number of people earning minimum wage and living in low-income housing. Such a measurement paints a very bad picture of poverty considering the lack of affordable housing which forces low-wage workers to live in a place above their means. Moreover, the cost of housing can represent more than 50% of the salary of a low-wage worker. According to the 2016 Housing Needs Assessment by the cities of Moncton and Dieppe: ’’Housing is considered affordable if households spend no more than 30% of their gross income on housing costs […]. A total of 89.5% of all Moncton households with incomes in the lowest income category were spending 30% or more on housing costs and 73.7% were spending 50% or more of their income on housing costs.‘’ Knowing that the low-income households assessed in the study belong to the same income category as those at minimum wage, we can assume the people earning that income have difficulty meeting their basic needs.

On the other hand, a single person earning minimum wage in New Brunswick can only purchase 60% of the value of a healthy food basket. Therefore, it is wrong to say that minimum-wage workers are looking for pocket money. According to the fact sheet on minimum wage in New Brunswick (2016), people aged 20+ represent 53.5% of minimum-wage workers. And, it is also wrong to say young people don’t need money to survive. In fact, it is impossible to generalize the financial context of all young people who, according to the AIMS, only need pocket money or career opportunities. Some have a job because their family does not support them financially or because of specific socioeconomic conditions. We cannot assume people don’t need their salary to survive.

In order for employers to have employees, those employees must be able to provide for themselves. Therefore, by eliminating minimum wage, the salary of those employees would diminish and the government would have to provide more services to compensate the loss of salary. 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 is not high enough to meet their basic needs. It is already the case in New Brunswick since the government must provide services and subsidies to help those workers survive. That is a good example of corporate welfare so much criticized by taxpayers.

According to the AIMS report, a minimum-wage job should not be considered as permanent in one’s career but as a transition to a better job. Such an argument is not quite true because, according to the fact sheet on minimum wage in New Brunswick (2016), 65.9% of the low-wage jobs turn out to be permanent.

Minimum wage is not only good for the workers it is also good for the economy. According to economist Armine Yalnizyan (2017), by increasing the minimum wage to $15 an hour, we increase the salary of 33.7% of workers in Atlantic Canada. Such a measure would increase the demand and would be beneficial to companies. What a good way to stimulate a slowing economy! By stimulating the economy, not only would low-income workers benefit from the increase in salary, but so would the population as a whole.

Yalnizyan (2017) also mentions another advantage to increasing the minimum wage, namely better staff retention because, 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, the AIMS suggests letting the labour market take care of the working conditions. Let us remember the awful work conditions of the industrial era when the labour market set the working conditions. Parental leave, security at work, vacation time, reasonable working hours were all gained by workers who fought for centuries for better work conditions in order to have a happy life. Do we really want to go backwards?

Catherine Roy Comeau and Maxime Dubé

855-8977 855-8977

236 rue St George, pièce 412 236 St George St., Suite 412

Moncton, NB, E1C 1W1 Moncton, NB, E1C 1W1

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