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GUEST COLUMN: $15-per-hour minimum wage proposal flawed

- Reuters

Vaughn Hammond

On Aug. 13, 2019, Mary Shortall of the Newfoundland and Labrador Federation of Labour (NLFL) wrote an opinion piece in The Telegram expressing support for a $15-per-hour minimum wage. The Canadian Federation of Independent Business (CFIB) argues that this proposal is not the right one for Newfoundland and Labrador.

From our perspective, providing tax relief to low-income workers is the most effective way to help low-income workers (a view supported by a Memorial University labour economist incidentally). This can be accomplished through the Low Income Tax Reduction program. Nonetheless, we consistently hear from the NLFL and others this is not enough.

Shortall went further in her opinion piece by claiming low income tax relief is a subsidy for business.

Would the NLFL and others claim extending health and dental benefits to social assistance recipients holding full time jobs be considered a subsidy to business as well even if the social assistance recipients benefit significantly? When it comes to helping low income workers, the anti-business rhetoric is unhelpful.

Advocates for an increase in the minimum wage often state that poverty levels in Newfoundland and Labrador are the highest in the country. Recent data released by Statistics Canada show poverty, especially as it concerns children, is falling in the province. In addition, the provincial government spends nearly $300 million annually on poverty reduction initiatives. If this is funding is not achieving its goals, then the provincial government should undertake an immediate review to ensure they are.

It is also often been stated by advocates for minimum wage increases that if a business cannot offer a $15-per-hour minimum wage to its employees, then it has no reason being in business. This does not hold water. Many small-business owners in the province pay $15 per hour or more to attract and retain employees.

For example, how will day care centres deal with a $15-per-hour minimum wage? To better manage high employee turnover, many daycare centres offer a starting wage close to $16 per hour. If the minimum wage does become $15 per hour, daycare centres will have to provide a commensurate increase in their wages to compete for workers. This means daycare rates will have to increase if government does not provide a substantial increase in its subsidy per child. It is highly unlikely child care becomes more affordable with a $15-per-hour minimum wage and there is a distinct possibility day care centres would have to close.

Or it becomes more expensive for the provincial government.

But it is not only daycare operators who are concerned about whether their business will survive a minimum wage increase to $15 per hour. With lower revenues and higher operating costs, many small businesses in Newfoundland and Labrador are finding it difficult. For instance, retail sales in 2018 fell for the first time in many years and the trend so far in 2019 is not promising. It is uncertain how a $15-per-hour minimum wage would turn this decline around.

The minister of Advanced Education, Skills and Labour has said minimum wage will undergo the required legislative review and CFIB will be participating to the fullest extent possible. However, as part of this review, the minister should release an independent, comprehensive economic analysis of a $15-per-hour minimum wage in Newfoundland and Labrador, which should include the alternative policy options. The labour market in Newfoundland and Labrador is unique (for example, relatively higher unemployment and more seasonal work) and this has to be recognized.

If the goal is to help low income workers in Newfoundland and Labrador, CFIB believes there are better options available. Increasing the minimum wage to $15 per hour is simply flawed.

Vaughn Hammond is Director of Provincial Affairs for the Canadian Federation of Independent Business in Newfoundland and Labrador. He writes from St. John’s.


RELATED:

• GUEST COLUMN: It’s time for a $15 minimum wage in N.L.

• Debate over $15/hour minimum wage ramps up in Newfoundland and Labrador


 

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