By Ray Rivers
February 6, 2014
BURLINGTON,ON.
There is at least one academic study which claims that increasing the minimum wage would make poverty worse – but the authors note that the result is not statistically significant. And the study is so full-up of assumptions that changing any of them might flip the result. Nevertheless, those opposed to minimum wages hold this up as proof that minimum wages kill jobs and increase poverty, rather than reduce it.
A raise in the minimum wage of 75 cents an hour isn’t going to produce much – $30 a week at best.
Those who support increasing minimum wages disagree and produce their own studies to show a host of benefits. The President of the United States is apparently in that camp and so is Ontario’s Premier. Taking her cue from the Ontario Minimum Wage Advisory Panel, which she appointed last year, she has raised the provincial minimum wage and tied its future to the cost of living. And, she has credibility on her side, since the provincial Liberals’ poverty reduction strategy claims to have lifted almost 50,000 children out of poverty between 2008 and 2011.
Still, less than ten percent of Ontario’s labour force work for a minimum wage, about half a million workers. And not all those living below the poverty line are employed, so it will take more than raising minimum wages, if solving the poverty problem is our end goal. Raising the income and dignity of those whose only choice is to accept a low-paid job is an important outcome, however, for a government which cares about all residents and not just the well-off. However, eliminating poverty would require a more substantial initiative, including revamping our tax system and some leadership by the federal government.
In the 1970‘s both Canada and US ran pilot projects testing something called a ‘negative income tax’ or ‘guaranteed annual income (GAI)’. The idea was to ensure everyone received a livable income from their work, or would be matched with a government grant if they didn’t. Don’t be alarmed, this concept is somewhat comparable to the existing HST rebate, which goes to lower-income households. The Canadian pilot projects were aborted before the results could be fully evaluated, victims of unusually high unemployment rates, high budgetary deficits and newly elected Conservative governments eager to uproot socialism.
Some of the early results indicated that there would be only a modest impact on labour markets but significant changes to how people use their time – mothers doing more child care, greater family leisure time and enhanced educational activity. Demographics have changed considerably since the 70‘s so the results may not be very useful for implementation today, even were today’s conservatives willing to overlook their oft-recited Protestant creed – ‘the Lord helps them who help themselves’.
But not all conservatives are spooked by innovative approaches to eliminating poverty. Senator Hugh Segal is a proponent for GAI and argues that such a plan could be funded entirely from the resources being poured into the existing patchwork of poverty reduction programs. In addition, existing welfare programs perversely discourage recipients from looking for work, while GAI would encourage them to top-up their incomes by accepting low paid work – at least until better opportunities come available.
Hugh Segal has spent most of his working life as a Progressive Conservative in some capacity or other, including senior aide and chief of staff for Premier Bill Davis and PM Brian Mulroney, and seeking public office himself. He was appointed to the Senate by Liberal PM Paul Martin in a rare moment of non-partisanship, as if Martin was somehow anticipating Justin Trudeau’s recently articulated appointment policy.
But Senator Segal is very much a voice in the wilderness on this issue among the political movers and shakers. Though he may not be too far ahead of the general public, which recent polling shows is becoming interested in, and supportive of, the concept of a guaranteed annual income. Still no political leader seems to have made this a priority. In the meantime I guess we’ll have to settle for Premier Wynne’s inflation-proof minimum wage.
While on this topic I don’t understand why today’s wait-staff (liquor servers) get treated like something out of a Dickens novel. Their minimum wages are set conservatively at about a dollar less than that of other eligible workers, making them reliant on the archaic practice of begging for tips -‘To Insure Prompt Service’. In New Zealand, for example, tipping is infrequent and unexpected because the restaurants there pay their staff decent wages up-front. Even here, some restaurants slap on a mandatory service charge, which presumably goes to the wait-staff and avoids that annoying tipping.
Wouldn’t it be nice if the next time that attractive person waiting on your table flashes those big brown eyes, you know it’s because he, or she, is interested in something other than what’s in your wallet.
Ray Rivers writes weekly on both federal and provincial politics, applying his more than 25 years as a federal bureaucrat to his thinking. Rivers was a candidate for provincial office in Burlington where he ran against Cam Jackson in 1995, the year Mike Harris and the Common Sense Revolution swept the province. He developed the current policy process for the Ontario Liberal Party.
Background links:
Some things worth consideration;
-Ontario is $273,000,000,000.00 in debt.
-That debt grows by $1,000,000,000.00 per month
-A liquor server owes $20,000.00 as a per capita portion of that debt (as does each of his/her children).
-50% of moneys spent by the Ontario government go to government wages.
One might argue that reckless government spending and abuse of taxpayers dollars has much to do with today’s poverty situation.
With regard to “wait-staff”, tipping is more or less a culturally accepted thing here in Ontario (I, for one, have always considered it a normal practice and have never though of it as “begging”). Would servers prefer to be paid a dollar more in lieu of tips? I doubt it.
As for the 75 cent/hr wage hike, I think it has more to do with optics by Premier Wynne. To many, it will be analogous to showing up at a horrendous battlefield with a band-aid and a tube of Polysporin.
Similar to New Zealand, Scandinavia also has done away with the feudal practice of tipping.
Ray google Steve Paikins The Agenda of Tue. Feb 4/14
Relevance let us know what you think.
Thanks Jordan – yes a good discussion of the issue as well.
Ray