Recently the Liberal Government increased the British Columbia minimum wage to 10.25 an hour. No other financial discussion creates more emotion than an increase to the minimum wage. (Also called the Okanagan or Kelowna “Sunshine Tax”)
The BC Federation of Labour’s (BFED) Jim Sinclair has been lobbying for an increase to a 13 dollars an hour immediately. His reasoning is this represents the poverty line in British Columbia. The BCFED is also asking for an increase to general minimum wage to 15 dollars an hour.
At 10.25 this is the the lowest minimum wage in Canada according to the Government Canada 2014
Graphic from Shaw.ca Global News
Increasing wages are a difficult one for governments. One one side you have workers needing to pay bills and taxes. Higher wages can increase their spending power. The other side are many business owners that pay lower wages need these wages to be profitable. Raising prices can make a business less competitive.
Will increasing wages be a good thing for the provincial economy? Hard to say.
The whole discussion got me thinking – what is the history of the minimum wage? Why was it done? Did it work?
A minimum wage was part of National Industrial Recovery Act in 1933 proposed by US President Franklin D Roosevelt’s administration. (No NRA on the poster below did not mean National Rifle Association).
The program was not only about increasing wages, it had more to do with putting people back to work by sharing jobs.
PRESIDENT FRANKLIN D. ROOSEVELT: “The proposition is simply this – if all employers will act together to shorten hours and raise wages, we can put people back to work. No employer will suffer because the relative level of competitive cost will advance by the same amount for all of them.”
Minimum Wage – National Recovery Act
Check out the podcast from NPR – Planet Money “The Birth of the Minimum Wage” – http://www.npr.org/blogs/money/2015/02/11/385468357/episode-510-the-birth-of-the-minimum-wage
Will an increase to the minimum wage do for British Columbia as it did for United States in the 1930’s? Good question.
Today’s world is different, we can buy on line from around the world. We don’t have to buy from a BC business if we don’t want too. Consumers have been accustomed to getting higher wages and lower prices. This might make this kind of strategy not work like it did for FDR.
I am free enterpriser, and a business owner. But there are times that we need to raise bar on the minimums, like wages. The question is are customers going to be willing to spend more as wages increase.
My thought – If we want a great place to live, it is hard to do if you can’t buy groceries and pay rent. Wage earners are more than workers, they are also your customers.