One of the observations not mentioned when discussing a potential 35% increase in the minimum wage, is the subsequent wage spiral that is likely to occur.
If I give my front line employee $4 an hour more, his Supervisor will want $ 5 an hour more, his Manager $10 an hour more and so on up through the entire organization. Such an adjustment will lead to more than a 10 cent increase on your Cup of coffee.
Nick the follow-on increase in wages is explicitly recognized in the calculations. It does not grow with rank. So , for example it would not affect the pay of pharmacists when the cashiers get an increase.
Mr. Black…. I enjoy your articles in the Herald. As opposed to many your articles tend to be well thought out and not just repetition of what others say elsewhere. Your column on allowing some private health care options was spot on .
I must add , however, that I believe you missed the mark somewhat on your $15 minimum wage column. In particular there is a statement at very start of article that people cannot make a living off the current minimum wage. That neglects to look at some detail. According to Stats Can 88% of people on min wage are not in a single income household. More than half are students being supported at home and over 30% are second incomes with a primary income being the breadwinner. Only a very small minority are trying to “survive” on min. wage. Therefore the usual statement of trying to alleviate poverty by raising min. wage is misplaced as most are not in poverty in the first place. If poverty is to be “fixed” then raising min wage is not the way to do it.
Similarly you state that min wage increases raise government revenue from taxes but that is also not proven. You reference one recent study from Seattle . It showed that the total $$ flowing to low wage earners actually decreased . Some got the higher wage but that was cancelled out by those who had hours cut or lost their jobs all together. To assume that businesses in a very borderline economy such as NS will pay more in total to min . wage earners is a giant leap of guesswork. I would think it even more likely in this province that businesses would cut workers , move or shutdown than end up paying much more out in wages. If there is any increase at all in tax revenue it likely would not be much
Your subsequent ideas are well reasoned except that one glosses over the fact that price increases would be a large part of the solution for restaurants , grocery stores and those businesses with many min wage workers. This means the population will end up paying a lot of the cost through price inflation which also does not benefit a poor region. With the high tax burden already in this province , I for one would consider moving out of province if we get hit with large price increases on top of the already high taxes we see here.
The $15 minimum wage is not a fix for what ails us here in my opinion. Increasing it at rate of inflation or even slightly above might be ok.
(1) I take it you get your 88% figure from the Fraser Institute Study (https://www.fraserinstitute.org/blogs/the-typical-minimum-wage-earner-in-canada-not-who-you-think).
The data can be interpreted two ways: Minimum wages aren’t too low because most of those workers are living with their parents OR Minimum wage earners are living with their parents because they can’t afford a place of their own.
I am inclined to the latter interpretation for anyone over 20. Did you live at home by choice after completing your education?
(2) I referenced both the University of Washington study and that of the University of California at Berkeley. Neither is particularly credible or useful.
(3) Yes, the government will get more taxes (I agree that it is not much) and you and I will have to pay another dime for a cup of coffee in 2022. The reduced hours theory is unproven and, in any event, they would not fully offset the wage increase. I don’t think we will miss the dime.
Most restaurants and all bars will not be impacted because in my proposal tips count toward the minimum.
(4) The article makes no claim that this will defeat poverty.
(5) The principal benefit I see for the proposal, beyond helping low wage workers, is for processors and manufacturers outside of Halifax. They are suffering a continuous exodus of workers to larger centers because the workers can’t or don’t want to live on minimum wage, whether they are single living on their own, or a couple—perhaps they would like to start a family.
Those businesses may eventually fail because of lack of workers.
It only works if government creates the conditions that enables invest in tools, technology, and training to be able to afford the higher rate because of higher productivity. Note the gradual phase-in that was proposed.
Some of the most successful rural employers have already done this and are as a result at or close to paying the $15 target for higher value jobs.
As with all of these programs there will be losers and winners. A higher minimum wage will put more money in the hands of some. Higher labour costs will drive the push for fewer labour hours consumed . Therefore jobs will be lost or full time jobs become part time.
I do not see dramatic improvements for NS with significant increases to minimum wage. If it was a great solution to our problems take it $30 immediately.
Low unemployment is the best solution for wage rates. Then sizable increases to min wage to protect the most vulnerable make sense as a social policy
If a ‘business’ cannot (or will not) pay those who’s endeavours make it a viable reality, then one might realistically question whether or not it deserves continued operation.
There is something really wrong in NS. We have several universities and business schools, , so we have all kinds of people that teach about economics and business, but yet we are in a mess. We talk as if tourism is important, but it is not administered that way . We stopped inspecting ands licensing accommodation, government is actually helping grow the underground economy of vacations homes, Air B&B and these are all hitting NS tourism areas hard . Numbers talk , and NS government people better start leaning how to read the financial reports for their departments .In 90% of rural NS , we have fewer stores , fewer gas stations, fewer B&B’s, fewer people , increased retirees, increased public service labour and less private . So what does the province do ??? NOTHING .
Or, do nothing. If a worker’s pay represents his/her marginal contribution to the firm,allow the market to decide. With all respect, I am highly skeptical of the ability and effectiveness of our bureaucrats to micro-manage our economy. If we feel we have to do something, focus on training to increase workers’ productivity.
One of the observations not mentioned when discussing a potential 35% increase in the minimum wage, is the subsequent wage spiral that is likely to occur.
If I give my front line employee $4 an hour more, his Supervisor will want $ 5 an hour more, his Manager $10 an hour more and so on up through the entire organization. Such an adjustment will lead to more than a 10 cent increase on your Cup of coffee.
Nicholas Carson | July 14, 2017 |
Nick the follow-on increase in wages is explicitly recognized in the calculations. It does not grow with rank. So , for example it would not affect the pay of pharmacists when the cashiers get an increase.
Bill | July 14, 2017 |
Mr. Black…. I enjoy your articles in the Herald. As opposed to many your articles tend to be well thought out and not just repetition of what others say elsewhere. Your column on allowing some private health care options was spot on .
I must add , however, that I believe you missed the mark somewhat on your $15 minimum wage column. In particular there is a statement at very start of article that people cannot make a living off the current minimum wage. That neglects to look at some detail. According to Stats Can 88% of people on min wage are not in a single income household. More than half are students being supported at home and over 30% are second incomes with a primary income being the breadwinner. Only a very small minority are trying to “survive” on min. wage. Therefore the usual statement of trying to alleviate poverty by raising min. wage is misplaced as most are not in poverty in the first place. If poverty is to be “fixed” then raising min wage is not the way to do it.
Similarly you state that min wage increases raise government revenue from taxes but that is also not proven. You reference one recent study from Seattle . It showed that the total $$ flowing to low wage earners actually decreased . Some got the higher wage but that was cancelled out by those who had hours cut or lost their jobs all together. To assume that businesses in a very borderline economy such as NS will pay more in total to min . wage earners is a giant leap of guesswork. I would think it even more likely in this province that businesses would cut workers , move or shutdown than end up paying much more out in wages. If there is any increase at all in tax revenue it likely would not be much
Your subsequent ideas are well reasoned except that one glosses over the fact that price increases would be a large part of the solution for restaurants , grocery stores and those businesses with many min wage workers. This means the population will end up paying a lot of the cost through price inflation which also does not benefit a poor region. With the high tax burden already in this province , I for one would consider moving out of province if we get hit with large price increases on top of the already high taxes we see here.
The $15 minimum wage is not a fix for what ails us here in my opinion. Increasing it at rate of inflation or even slightly above might be ok.
BT | July 10, 2017 |
Blair thanks for this.
Some comments:
(1) I take it you get your 88% figure from the Fraser Institute Study (https://www.fraserinstitute.org/blogs/the-typical-minimum-wage-earner-in-canada-not-who-you-think).
The data can be interpreted two ways: Minimum wages aren’t too low because most of those workers are living with their parents OR Minimum wage earners are living with their parents because they can’t afford a place of their own.
I am inclined to the latter interpretation for anyone over 20. Did you live at home by choice after completing your education?
(2) I referenced both the University of Washington study and that of the University of California at Berkeley. Neither is particularly credible or useful.
(3) Yes, the government will get more taxes (I agree that it is not much) and you and I will have to pay another dime for a cup of coffee in 2022. The reduced hours theory is unproven and, in any event, they would not fully offset the wage increase. I don’t think we will miss the dime.
Most restaurants and all bars will not be impacted because in my proposal tips count toward the minimum.
(4) The article makes no claim that this will defeat poverty.
(5) The principal benefit I see for the proposal, beyond helping low wage workers, is for processors and manufacturers outside of Halifax. They are suffering a continuous exodus of workers to larger centers because the workers can’t or don’t want to live on minimum wage, whether they are single living on their own, or a couple—perhaps they would like to start a family.
Those businesses may eventually fail because of lack of workers.
It only works if government creates the conditions that enables invest in tools, technology, and training to be able to afford the higher rate because of higher productivity. Note the gradual phase-in that was proposed.
Some of the most successful rural employers have already done this and are as a result at or close to paying the $15 target for higher value jobs.
Bill Black
Bill | July 10, 2017 |
As with all of these programs there will be losers and winners. A higher minimum wage will put more money in the hands of some. Higher labour costs will drive the push for fewer labour hours consumed . Therefore jobs will be lost or full time jobs become part time.
I do not see dramatic improvements for NS with significant increases to minimum wage. If it was a great solution to our problems take it $30 immediately.
Low unemployment is the best solution for wage rates. Then sizable increases to min wage to protect the most vulnerable make sense as a social policy
Barry H | July 8, 2017 |
If a ‘business’ cannot (or will not) pay those who’s endeavours make it a viable reality, then one might realistically question whether or not it deserves continued operation.
Bob MacKenzie | July 8, 2017 |
There is something really wrong in NS. We have several universities and business schools, , so we have all kinds of people that teach about economics and business, but yet we are in a mess. We talk as if tourism is important, but it is not administered that way . We stopped inspecting ands licensing accommodation, government is actually helping grow the underground economy of vacations homes, Air B&B and these are all hitting NS tourism areas hard . Numbers talk , and NS government people better start leaning how to read the financial reports for their departments .In 90% of rural NS , we have fewer stores , fewer gas stations, fewer B&B’s, fewer people , increased retirees, increased public service labour and less private . So what does the province do ??? NOTHING .
peter S | July 8, 2017 |
Or, do nothing. If a worker’s pay represents his/her marginal contribution to the firm,allow the market to decide. With all respect, I am highly skeptical of the ability and effectiveness of our bureaucrats to micro-manage our economy. If we feel we have to do something, focus on training to increase workers’ productivity.
Steve Chipman | July 7, 2017 |