Minimum wage getting a boost

With calls for a $15 minimum wage continuing across Canada, some jurisdictions with much lower rates are opting for higher than normal rate hikes this year.

Prince Edward Island will raise its minimum wage by $0.70 an hour on April 1 to $12.25, the largest increase in the past
decade.

Nova Scotia’s minimum wage will rise by $0.55 an hour on April 1 to $11.55, the largest increase in almost a decade and much higher than the typical $0.10 to $0.20 raises over the last five years.

The rate is scheduled to rise by about $0.55 a year over the next three years.

While the increases will not bring minimum wage employees in those jurisdictions to the $15 rate that workers’ advocates say is a first step for reducing poverty, governments insist that the hikes strike a balance between the needs of workers and the economy.

“This increase provides support to those most in need, puts more money into the pockets of Islanders and stimulates our provincial economy,” said P.E.I.’s Workforce and Advanced Learning Minister Sonny Gallant.

“This increase will help minimum wage earners and their families, and it provides businesses a three-year outlook so they can plan,” said Nova Scotia Labour and Advanced Education Minister Labi Kousoulis.

P.E.I.’s rate changes are based on recommendations from its Employment Standards Board, while Nova Scotia’s come from its Minimum Wage Review Committee.

The committee normally adjusts the province’s general minimum wage based on percentage changes in the consumer price index (CPI) for Canada for the previous year, rounded to the nearest $0.05.

There is also a lower minimum wage rate, set at $0.50 less per hour, for workers with fewer than three months of
experience.

However, from 2019 to 2021, Nova Scotia rate increases will also include an extra amount to correct an error in the formula the province uses to set the minimum wage.

Before moving to the CPI method in 2012, the province first implemented a series of minimum wage increases to bring the rate in line with one of Statistics Canada’s Low Income Cut Off (LICO) thresholds.

LICO thresholds are based on the amount that an average person spends on necessities (food, clothing, and shelter). They vary by family and community size.

If a family must spend 20 per cent more of its income on necessities than the average family, it is considered low income.

When the committee recommended using LICO in 2008 as the basis for the minimum wage, it determined minimum wage based on a full-time employee working 40 hours a week over 50 weeks.

However, the committee has since determined that Statistics Canada considers 37 hours to be an average workweek, leaving the minimum wage well below the LICO threshold the province uses.

In 2018, for instance, the committee said the rate should have been $11.90 an hour, not $11.

To ensure that minimum wage reaches the LICO, the committee recommended, and the government agreed, that the minimum wage should rise to $11.55 on April 1, $12.10 on April 1, 2020, and $12.65 on April 1, 2021. The rate increases include a $0.30 adjustment for the LICO plus projected inflation of $0.25.

After 2021, the rate will return to annual adjustments based on the national CPI.

While advocates for a $15 minimum wage in Nova Scotia said they were glad to see a higher-than-normal rate hike, they added that it did not go far enough.

“While this is at least $0.35 higher than any minimum wage hike for the past six years (which should be celebrated), it still falls dramatically short of a living wage and — even according to the commission’s own logic — keeps full-time workers in poverty,” said a blog post for the group Fight for $15 and Fairness-Halifax.

The LICO threshold the committee uses has limitations, according to the advocacy group.

It applies for a population of 30,000 to 99,999 people, which, the post said, was much smaller than Halifax, where living expenses are higher and where more than 40 per cent of the province’s population lives.

It added that a living wage for a city like Halifax would be about $19 an hour.

A living wage is the amount someone would need to earn to pay for necessities based on the actual cost of living in their
community.

The province’s NDP also said it had concerns with the planned increases.

“Any increase that does not get us on track to reach a $15 minimum wage does not go far enough to encourage the kind of economic growth we need,” said NDP Leader Gary Burrill.

“Under the Liberals’ plan, Nova Scotia’s minimum wage in 2021 will be lower than what workers in Ontario, Alberta, Nunavut, and the Northwest Territories make today,” he said.

The NDP has called for the minimum wage to rise to $15 by 2020.

Another jurisdiction that is considering a steep wage hike this year is Yukon.

Late last year, its Employment Standards Board recommended that the government raise the minimum wage rate by $1.09 an hour to $12.60, which would be the biggest rate change there since 2012. Last year, the rate increase was $0.19.

The board said the proposals are part of a plan to gradually raise the rate to $15.12 an hour over the next two years, with the rate rising from $11.51 to $12.60 on April 1, $13.80 on April 1, 2020, and $15.12 on April 1, 2021. After 2021, the report recommended that the minimum wage return to annual adjustments based on increases in the CPI for Yukon.

The recommended rate hikes are based on yearly increases of about $1 ($0.90 in 2019, $1 in 2020, and $1.10 in 2021), plus projected annual CPI changes of about 1.5 per cent.

Besides helping low-income earners, the report said the rate increases could serve to attract workers to the territory.

“The Yukon is currently eighth out of 13 jurisdictions in Canada in the amount of hourly minimum wage. It is the lowest of the three territories,” said the report.

“If the Yukon minimum wage continues to fall further behind the minimum wage in Alberta, B.C. and N.W.T., it may contribute to the difficulty in hiring in the Yukon,” said the report, noting that gradual increases, with the smallest occurring in the first year, would help employers budget for the rate hikes.

While the report acknowledged that its recommendations would not create a living wage (estimated at $18.57 in 2018 for Yukon), it argued that there were other ways to achieve this, pointing to tax measures and government supports.

The Yukon government said it needed to review the report before deciding whether to implement the recommendations.

One other jurisdiction that is planning a large minimum wage hike this year is British
Columbia.

On June 1, the government will raise the general minimum wage rate from $12.65 an hour to $13.85. The increase is part of a plan to gradually raise the rate to $15.20 as of June 1, 2021.

The government also plans to eliminate a separate minimum wage rate for liquor servers by that date.

While advocacy groups calling for a $15 minimum wage have formed in most Canadian jurisdictions in recent years, they have had limited success. Although B.C. and possibly Yukon are working towards it, Alberta is the only jurisdiction that has a $15 minimum wage.

Ontario was expected to reach $15 this year, but the recently elected government cancelled the rate hike and froze the general minimum wage at $14 until October 2020.

Quebec has also rejected a $15 rate. In January, the government announced that the province’s general minimum wage rate would rise from $12.00 an hour to $12.50 on May 1. It said the increase would help workers while not causing hardship for businesses.

Although the raise will, for the first time, bring the minimum wage up to half of the average hourly wage rate in the province ($24.92 in 2018), workers’ advocates, such as Campagne 5-10-15, said it fell far short of the $15 rate needed to help move minimum wage workers out of
poverty.

In Manitoba, New Brunswick, Newfoundland and Labrador, and Saskatchewan, the minimum wage is indexed to inflation, with adjustments made each year. So far, the governments there have not announced plans for additional hikes.