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Minimum wage; minimum impact


Late last month the Manitoba government hinted at an upcoming minimum wage increase. In fact, Cliff Cullen, the province's minister for growth, enterprise and trade was quoted as saying that a new minimum wage to replace the current $11 hourly rate would happen "in the very near future".
After imposing a freeze last year, it makes you wonder why they would be considering this, especially with so much evidence to support that minimum wage increases don’t really help anybody. But, is a continuous freeze any healthier for the economy?
Leaders from groups like the Manitoba Federation of Labour and the Social Planning Council of Winnipeg want to see the rate upped to the mid-$15 mark. Management representatives, however, have told the province Manitoba's rate already compares favourably with other jurisdictions, with the average rate across Canada currently at $11.35.
Some provinces use a formula to automatically increase their minimum wage and some just go along with the inflation rate. But other provinces, like Alberta who is looking to hit $15 by Oct. 1, 2018, are making the commitment to drastically up the bottom line.
Officials in Alberta claim that if “you give money to a low-wage worker, they’ll spend that money and that money will go right back into the economy”. They feel that the costs for businesses dealing with higher labour costs will likely, in some way, be passed on to the consumer, but it will be minor.
I, and many others, don’t see it that way. In fact, it has been proven time and time again all across Canada and the United States that raising the minimum wage has some major flaws.
While there are many points to note in the argument, I feel the most important is that raising the minimum wage just, hands down, costs jobs.
A report by the American Action Forum found that a $1 increase in the minimum wage leads to a 1.48 percent increase in unemployment. You may ask how a single dollar can have such negative consequences and it’s easier to understand if you put yourself in a business owner’s shoes, especially a small business owner. If you have five full time employees and you have to pay each and every one a dollar more, that’s just over $10,000 a year in wages alone you have to find a way to cover. So, you’re going to find different and more efficient ways to do the tasks that need to be done and those non-essential employees can say goodbye to their jobs.
Raising the minimum wage is also proven to have little effect on poverty. Research has shown that only 22 percent of minimum wage earners live below the poverty line. In fact, just over 60 percent of minimum wage workers are students who are gaining valuable life experience.
So, while it’s good to remain competitive with other provinces by implementing small increases to the minimum wage, I personally don’t see the benefit of a major hike to the $15 mark.