First published at Global News on September 15, 2017.
I was never much of a math fan in school, but I’ve always understood its relevance and fixity. Those wanting a $15 minimum wage don’t share that deference to quantitative truths.
Alberta will have a $15 minimum wage next autumn, while Ontario’s Liberal majority government is pushing through labour reforms that will hike the minimum wage to $15 an hour on Jan. 1, 2019.
When Ontario Premier Kathleen Wynne proposed the increases, she did so in the name of “fairness,” a buzzword shared by most advocates, including Fight for 15 and 15 and Fairness — two groups that have been championing the wage across North America.
That alone should tell us that 15 is an arbitrary number: activists from rural and urban communities from Missouri to Ontario cling to it as the ideal wage, despite how different these jurisdictions are. This comes in spite of a body of research telling us how damaging such increases are.
Consequently, governments that adopt this cause find support from people prone to voting on emotions, rather than facts.
This week, Ontario’s Financial Accountability Office — an independent and impartial agency — published a report predicting 50,000 job losses due to the increase to $15 per hour.
Such a finding should give anyone cause to question the policy. But when people have already decided to disregard the numbers, it makes little difference.
The emotional nature of the minimum wage discussion conflates intrinsic worth with economic value.
Lots of people may seem worth $100,000 a year based on character, integrity, and work ethic, but simply don’t hold jobs warranting that value. (Conversely, I’ve encountered many workers worth a heck of a lot less than minimum wage.)
I’ve worked in the service sector for minimum wage. Some of the hardest working people I know plug away in similar jobs for years. Many have even bought homes and raised families on that income, challenging as it may be.
I love the idea of hardworking employees in unskilled, lower-paying jobs being rewarded with more money, but no matter how good one is at their job, earnings have to be measured against productivity and output, not social justice.
People like to compare the income of a large company’s lowest paid employees to that of its CEO, who likely has a compensation package in the millions; one must remember that each of these executives makes decisions that can earn — or cost — a company billions of dollars. Entry-level employees are more replaceable, and there’s a limit to how much value they can produce.
But supporters of a $15 minimum wage — including Ontario’s labour minister, Kevin Flynn — say it’s not fair for someone to work full-time hours and still have trouble making ends meet.
I’d say it’s not fair to force businesses into situations where they can’t make ends meet because they have to pay workers above market value, but that’s just me.
Flynn acknowledged, in a rare moment of candour, that price hikes or job cuts are inevitable. This goes against Wynne’s earlier suggestion that businesses can simply adapt.
Her supporters are ignorant of the fact that any increase in expenses must come from somewhere, and most small businesses simply don’t have a profit margin that can absorb this. It’s not that it would be cutting it too close, or that entrepreneurs don’t want to pay up. The money simply isn’t there.
Paying drastically higher wages just isn’t an option for many employers.
It’s a noble idea to pay people more money because it’s the “right” thing to do, but this perceived moral imperative doesn’t trump fiscal realities standing in the way of these inflated wages.
If raising the minimum wage is supposed to be rooted in economics, rather than emotion and politics, why not use a number more closely aligned with the cost of living?
Round numbers are rarely the answers to complex problems, so $15 has no significance apart from being memorable and marketable. A cost of living calculation would be likelier to yield a necessary wage that looks more similar to $12.32332958 per hour. (Full disclosure: I’ve done zero calculations to come to that number, but then again, neither did the Ontario and Alberta governments to reach theirs.)
How is $15 an hour a fair, livable wage for someone in the boonies of Alberta and also for someone in Toronto or Ottawa?
It would make more sense to implement a system of municipal and regional minimum wages. It sounds convoluted, but there is precedent for such a mechanism. Seattle infamously put a local $15 minimum wage into effect, which, studies show, had negative consequences for employers and employees alike.
I’m not suggesting this, as I’ve previously argued abolition of the minimum wage altogether. But if governments aim to tackle inequality through managing earnings, they shouldn’t pursue the easy way out.
The Ontario and Alberta governments are more interested in winning over low-information voters than solving poverty.
Feelings are powerful things, but as author Ben Shapiro has noted, facts don’t care about them.