Alberta is poised to leapfrog over Ontario to become the province with the highest minimum wage in Canada.
Premier-designate Rachel Notley has pledged to raise her province’s wage floor to $15 an hour during her first mandate.
That would catapult Alberta from the bottom of the national rankings, at $10.20 an hour, to the top, surpassing the current leader — Ontario, at $11 an hour — by a wide margin.
“It is simply unacceptable that in a province as prosperous as ours that hard-working Albertans cannot make ends meet,” the NDP leader said on the campaign trail. She calculates a $15 minimum wage — $31,200 a year for a full-time worker — would lift a couple or a single parent supporting a child out of poverty.
(That is consistent with Statistics Canada’s low-income cut-offs, which vary from $15,371 in rural areas to $29,004 in large urban centres.)
Notley’s plan is much bolder than anything Kathleen Wynne was willing to risk. When she took office, Ontario’s self-styled “social justice premier” raised the minimum wage by 75 cents to $11 an hour and tied future increases to the cost of living. (It is slated to go up to $11.25 in October.)
Her decision was a crushing disappointment for anti-poverty activists who had been calling for a minimum wage of $14.
“It is the fairest position we could have taken,” said Wynne, arguing a higher wage floor would have hurt business and reduced employment.
Under Wynne’s formula, Ontario’s minimum wage will reach $15 by about 2030. Notley intends to get there by 2018.
Like all campaign promises, this one should be viewed with caution. The new premier’s goal might prove too ambitious for her fellow Albertans.
She might encounter such fierce resistance from restaurateurs and retailers that she decides to lower her target or stretch out her timetable.
Notley might discover her province’s economy, weakened by last year’s precipitous drop in oil prices, can’t absorb a 47 per cent minimum wage hike. She might be consumed with other priorities.
But if she proceeds, Notley will become the first political leader in Canada to legislate a living wage and the first premier to break out of the austerity regime that now prevails at all levels of government.
In many ways, Alberta is an ideal place for the experiment. Its unemployment rate is low (5.5 per cent compared to a national average of 6.8 per cent). Very few Albertans — 1.5 per cent of the workforce — earn the minimum wage, according to provincial statistics. It has the highest median family income in the country ($92,300 compared to Ontario’s $73,700). And, so far, the damage done by last year’s oil price shock has been minimal.
Although Notley’s $15 wage floor would set a new benchmark in North America — where statutory minimum wages range from $5.25 to $11 — it would not be a global game-changer. A study released by the OECD (Organisation for Economic Co-operation and Development) last week showed a minimum wage earner working 20 hours a week can support a family of four in Britain, Australia and Ireland.
That is not solely because these countries have high minimum wages; they also co-ordinate taxation and benefit systems to
ensure the lowest paid workers get to keep their earnings and don’t lose vital social services such as childcare.
“Tax policy may be as important a driver of net wages and labour costs at minimum wage levels,” the study points out.
By this standard, Alberta wouldn’t do very well. It has a flat provincial income tax rate. Everyone, regardless of earnings, pays 10 per cent. Its human services department allows individuals moving from welfare to work to keep the first $230 a month they earn. After that, it starts clawing back their benefits.
Ottawa compounds the problem by requiring all workers to pay employment insurance premiums, although the vast majority of low-wage workers are ineligible for benefits.
Nevertheless, as the OECD points out, legislated minimum wage rates are “the most direct policy lever” governments can use to ensure work pays enough to live on. They also serve as a basic labour standard and an essential tool in poverty reduction.
Notley will no doubt be warned Alberta can’t afford to be in the vanguard in these uncertain times; that employers will balk; that jobs will disappear and the working poor will be the biggest losers.
Every political leader in Canada faces these arguments. No one has ever tested them. Who better than the premier of the country’s richest, most surprising province?
Carol Goar is a columnist who writes regularly for the Toronto Star.
© Copyright Canadian HR Reporter, HAB Press. All rights reserved.