Federal minimum wage

All glitter, no gold

Author: derek cameron – contributor

Take heed, this does not apply to all minimum wage workers. / Michael Chmielewski

Earlier this week, NDP leader Thomas Mulcair brought to the house a resolution that would bring back the previously dissolved Federal minimum wage. The motion would introduce a $10 an hour wage and increase it to $15 an hour over five years. The motion failed, but  Mulcair has promised that if his party is elected, he will reintroduce the bill and pass it after the 2015 election.

To be clear, this does not mean that every minimum wage job in Canada will have a starting wage of $ 15 by 2019. Federal minimum wage applies to minimum wage workers in government jobs and federally regulated industries like railways, banking, etc. This amounts to one per cent of the Canadian workforce or about 40,000 to 100,000 people.

Many students reacted with enthusiasm saying, “He’s got my support!” as they mistakenly assumed it applied to all minimum wage workers. This is seems to be the response the NDP was hoping for. This motion gives the illusion of helping low-income families when, in fact, it affects a population so small as to be negligible. Not to say the 40,000 won’t be helped, only to say that the vast majority will remain unaffected.

The stated reason of this resolution is to reduce economic inequality. Dr. Jason Childs, an economics professor at the University of Regina, is unconvinced.

“The NDP wants to bring in a carbon tax if elected, so why would they think that increasing the price of carbon will result in less carbon emissions, and then make the claim that increasing the price of labour will not result in less people being hired.”

Federal employees are paid through taxes, so then taxes simply need to be raised. In theory, to raise these taxes the NDP will tax the rich, in practice, the rich have tax lawyers to help them evade taxes, and in the global economy, it is simple enough to move capital into more tax friendly countries. So it falls upon the middle-class.

“They are the easiest to tax, and they generally sit still for it.”

The hope is that by enacting a federal minimum wage other companies will raise their starting wages to attract employees.

“It’s such a small number, there’s no pressure for other companies to raise wages.”

Dr. Childs thinks it will lead to an increase in unemployment, asserting that people will pass over lower-wage jobs, holding out for a chance at one of the new higher-paying federal jobs.

In short, the NDP’s move to enact a Federal minimum wage will not change the wealth inequality gap. A select few will get higher wages, with a trade off of more people being unemployed; the rich will avoid higher taxes, and the burden will fall on the middle-class.