Governments gamble on a minimum wage hike

On January 1, Ontario raised the  general minimum wage in its jurisdiction to from $11.60 per hour to $14.00. British Columbians are promised a similar jump in the near future, though the timing is subject to the work of a government-appointed commission.

Members of the Tim Hortons restaurants’ founding family reacted to the Ontario increase by taking petty revenge on their own workers, stripping them of non-wage benefits at the locations they still own directly. This triggered a brawl within the Tim Hortons organization, with the corporate head office urging franchise owners to handle the issue more discreetly.

This blog site supports the implementation of a substantially higher minimum wage in Canada because it will benefit a large number of people, acknowledging that the increase will put pressure on small businesses that are already drifting to the margins for other reasons.

I’ve been following the news media since the mid-1960s, when the minimum wage in my home province was something like $1.25 per hour. At every minimum wage hike, small business groups have issued dire warnings about job losses and business failure. The facts, as I understand them, are roughly as follows.

First, minimum wage increases over the past 40 years have been entirely eaten up by inflation. On June 15, 2017, Global News quoted Statistics Canada on this point: “While Canada has undergone important economic, social and technological changes since the 1970s, the minimum wage and the average hourly wage are essentially unchanged.”

Second, through the long era when the real minimum wage was unchanged, a huge number of small businesses closed their doors nonetheless. A 2010 Industry Canada study stated that a business failure rate of 50 per cent in the first five years of operation is normal. “Young organizations face many vulnerabilities and liabilities. They may lack sufficient financing, business networks and skilled employees in their early days. They may still be having problems ensuring consistent production quality. It takes time to develop a reputation in the market and a stable set of customers and suppliers.” 

Other commentators are less charitable. Googling at random, I find blogger Patricia Schaefer (2017) suggesting that “Going into business for the wrong reasons,” and “Poor management” are the top two of seven common reasons for business failure. The minimum wage does not come up.

Of course, a sudden 20 per cent increase in the minimum wage is well above the norm. It is intended to be a game-changer. It represents an effort by Ontario, and presumably British Columbia, to deliver a real wage increase to folks who have been struggling, especially with runaway housing costs.

A new study published by the Bank of Canada estimates that 8 per cent of the national labour force earns the minimum wage, or about 1.5 million individuals. About 40 per cent of the minimum wage group, according to a Statscan report from 2014, are over the age of 25. A wage boost  obviously improves the ability of minimum wage earners to find decent housing and look after their kids, if not save for retirement. The Bank of Canada study suggests that a wider group of low income earners, more than a million people nation-wide, would see their low wages bumped up as a result of the minimum wage hike.

The downside to a 20 per cent minimum wage increase is that some businesses will cut their expansion plans, and others will blame the change for their decision to fold. Business failures may occur, for example, in rural villages and hamlets where the customer base is small, and the convenience store or cafe has operated at the margin for some time; or in Metro Vancouver locations where retail-store rents have tripled in the past few years. The Bank of Canada study estimates that forecast minimum wage hikes will raise total labour income, but will reduce national net job creation during 2018 by somewhere between 30,000 and 160,000 full-time equivalent jobs. By comparison, the Canadian economy created an estimated 440,000 jobs in 2017.

The Ontario and B.C. governments are gambling here. The will both face well-organized right-of-centre parties in their next election campaigns. For Ontario, that event arrives in spring 2018. Small business people vote; low-income people often don’t vote. The two governments can only hope that the economic and social benefits from the increased minimum wage will offset the hard-luck stories from affected businesses; or that voters want to hear about something else.

 

Metro Vancouver’s homeless report: where to from here?

2017-metro-homeless-report-cover

With a growing number of homeless camps (now estimated at 70) dug into Metro Vancouver communities, conversation on the issue has veered into a world of personal attacks and draconian proposals. One sample “solution,” endemic in community news chat threads, would re-establish the vast 1905-era asylum on its hillside in Coquitlam and lock homeless people inside.

This is a waste of time, of course. There’s no cheap or easy route to rolling back the homelessness problem. In fact, a new report from the Metro Vancouver regional authority is daunting in describing the actions that would be required even to hold the status quo. Continue reading

The working poor in Metro Vancouver

Walmart

The Canadian Centre for Policy Alternatives, a left-leaning research centre, has published a report on the incidence of poverty among working people in Metro Vancouver.

The 35-page study by CCPA economist Iglika Ivanovna has major flaws as an advocacy piece, but it delivers the useful reminder that “having a job is not a guaranteed path out of poverty.” Continue reading

A homeless camp in a Vancouver suburb

2015 homeless camp 1 reduced

Nicole Read, the mayor in my home city of Maple Ridge, won election as a political newcomer in November 2014. The local election campaign was marked by concern over downtown property crime, linked by some to the presence of homeless people in vacant spaces nearby. The homeless have been a prominent feature of the town centre for more than a decade, but the incumbent mayor and council were blamed and Read  got the political benefit.

Weeks after the mayor’s swearing-in, a colourful row of tents sprang up on a residential street 200 metres from my home. In the 2014 Metro Vancouver homeless count, Maple Ridge and Pitt Meadows together were said to have 39 unsheltered homeless people. By July 2015, the estimated population of the Cliff Avenue camp was about 60. Continue reading

Child poverty in Metro Vancouver

A detail from the 2014 Child Poverty Report Card. Areas of highest concentration (over 40 per cent) include a set of communities east of Vancouver's downtown, Squamish territory at the north end of the Lions Gate Bridge, and Metrotown in Burnaby.

A detail from the 2014 Child Poverty Report Card. Areas of highest concentration (over 40 per cent) include a set of communities east of Vancouver’s downtown, Squamish territory at the north end of the Lions Gate Bridge, and Metrotown in Burnaby.

Some Canadians are much healthier than others. Poor health outcomes are more likely among: children and families living in poverty; the working poor; the unemployed/underemployed; those with limited education and/or low literacy; Aboriginal and remote populations; newcomers; persons suffering from social exclusion; the homeless; and those who have difficulty securing affordable housing. — Final Report of the Senate Subcommittee on Population Health, 2009

In late 2014, the BC Child and Youth Advocacy Coalition issued a Child Poverty Report Card organized into 10 fact sheets, including a fact sheet on Metro Vancouver.

For this website, the takeaway is that poverty thrives in all parts of Metro Vancouver, though it may not show up at street level.  Besides the often-documented Downtown Eastside, there are zones where poverty is common in Richmond, Burnaby (including Edmonds, discussed in our February 2 post), Surrey, Langley — and in fact, in almost any urban centre. Continue reading