Minimum wage hike good policy and politics

Christy Clark’s quick action on the minimum wage is both good public policy and politically smart.

Clark made increasing the minimum wage one of her first acts. The wage – stuck at $8 since 2001 – will go to $8.75 May 1, $9.50 on Nov. 1 and $10.25 the following May.

That will more than make up for lost ground over the last decade.

Practically, the change makes sense. About 40,000 employees in the province are paid minimum wage. Some work for minimum wage briefly, or are part-time workers supplementing family income.

But some are living and even raising families on the wage. Leaving them without an increase for a decade, mired in worsening poverty, is simply wrong and exploitive.

Most of the business community has accepted the need for an increase for some time, even as Gordon Campbell refused to act.

The increase still rankled some. The restaurant industry warned about job losses.

But B.C. went from having the highest minimum wage in Canada in 2001 to the lowest today. Even after first increase to $8.75 in May, B.C. will still have the lowest.

If restaurants in every other province can operate successfully with higher minimum wages, surely managers and owners in B.C. can.

Some businesses warn that raising the minimum wage has a ripple effect – that all low-income workers will be affected.

But again, businesses in other provinces deal with that. B.C. businesses were able to pay higher real wages in 2001, based on the minimum wage then. Why not now?

And businesses worried about the size of the increase can reflect on their failure over the last decade to support small, regular incremental increases.

There’s an underlying philosophical issue at play.

A free market is generally a good way to determine pay. Employees offer their services; employers bid for them. Those with skills and a track record command more; if they contribute to a company’s success they are rewarded out of fear they might leave. (In real life, it’s not quite so tidy.)

But we’ve agreed people without bargaining clout, who do a fair day’s work, shouldn’t be protected from the effects of market forces. Just because some can only command $10 a day doesn’t mean an employer should be able to pay that little.

Or most of us have. The Campbell government’s long refusal to increase the minimum wage began to leave the impression it didn’t really believe in the concept.

Clark’s quick and significant action signalled a different approach, emphasized when she said the increase was “long overdue.” By phasing in the increase, she gave companies time to plan.

And she linked it all to the “family first” theme.

The move was also quite a contrast to Campbell’s first act in government, a reckless 25-per-cent income tax cut that hadn’t been mentioned in the 2001 campaign and plunged the province into a deep deficit.

Clark didn’t take the next logical steps. The minimum wage should be indexed to the cost of living or the average wage in the province – like MLAs’ salaries – so big catch-up jumps wouldn’t be needed.

And she could have announced action to help another group of dirt-poor British Columbians who have seen their real incomes eroded over the last decade – people living on income and disability assistance.

You can’t really have a family first agenda when children are being raised in dire poverty. But income assistance for a single parent with two children, deemed employable, is less than $300 a week (and less than a minimum wage job). Those children are in trouble.

Still, changes to rates or to give people on income assistance the chance to earn a few dollars without being penalized – a move that would cost the government nothing – might be just ahead.

Meanwhile, give Clark credit for “long overdue” and equitable action on the minimum wage.

Footnote: Clark also eliminated the $6 “training wage” employers were allowed to pay new hires.

But she announced a $9 minimum wage for servers in establishments with liquor licences. Their income generally includes tips which take them above the minimum wage level.