Poverty cannot be eliminated or prosperity ensured by a wave of the legislative wand, but governments still have a responsibility toward those at the bottom of the economic scale. The difficulty is deciding how much to do and when.
Raising the minimum wage is a good start, but by itself will not accomplish enough.
Some of our neighbours to the south have decided that boosting the minimum wage to $15 an hour is one way to help lift people out of poverty. It will take time to tell how effective that measure will be, so B.C. should not wait for the results of the American experiments before moving ahead in battling poverty.
Los Angeles has joined Seattle and San Francisco in raising the minimum hourly wage to $15 from $9 an hour. The increase will be phased in over five years.
Seattle has already decided to raise the minimum wage incrementally; the first increase kicked in on April 1. Employers with more than 500 employees have until 2017 to raise the wage to $15 for their workers, and then raise it every year according to inflation. Smaller employers have until 2021 to reach that point.
The issue of raising the minimum wage always stirs a war of statistics and studies. Those opposed 鈥� generally pro-business organizations 鈥� say boosting the wage harms businesses, especially small ones, and reduces employment as business owners lay off workers they deem unaffordable. More jobs are lost, goes the reasoning, as employers look to automation, outsourcing and other means of cutting costs.
Those in favour of wage hikes, including a growing number of economists, say higher pay results in more money circulating in the economy, boosting the GDP, while effects on the employment rate are negligible.
Admitting it doesn鈥檛 know what the outcome will be, Seattle鈥檚 city council appointed a committee from the community to study the effect of its decision to push the minimum wage to $15.
鈥淒epending on whom you are inclined to believe, higher wages might reduce inequality and make low-wage workers better off, or drive businesses and jobs out of the city,鈥� wrote committee members Jennifer Romich and Jacob Vigdor in a Seattle Times article.
鈥淎lthough proponents and opponents have argued forcibly for their positions, the simple truth is that we don鈥檛 know what will happen. As members of the nine-person team charged by the City of Seattle to study the effects of the minimum wage, we aim to find out.
鈥淓vidence from other places and other times, collected by labour economists over decades, is contested. And no locality to date has raised wages as substantially as the Seattle wage scale promises to do over the next few years. Moreover, the economic evidence has mostly focused on employment effects without carrying the analysis forward to study poverty and inequality.鈥�
On the other hand, the effect of B.C.鈥檚 scheduled minimum-wage increase is easy to calculate 鈥� it will hardly be noticed. The $10.25 hourly rate will rise two per cent in September, a drop in the bucket in Greater Victoria, where the living wage is calculated to be $20.05 an hour. That鈥檚 how much two parents with two children must each earn to meet basic living expenses, yet minimum-wage earners can only dream of making that much.
Nevertheless, raising the minimum wage should not be regarded as the one solution to poverty. If people are to climb out of the minimum-wage well, they will need the ladders of education, training and opportunity. Public money devoted to those areas would be well spent.
