Minimum wage hike

I read this morning that the minimum wage is going up from $7.25 to $7.75/hour. I have a couple of thoughts on this.

One, I think the reasons for how they come up with the minimum wage are silly. You can argue that wage levels should be set by the market. I don’t necessarily agree with that but at least it is an intellectually consistent position. But when I heard the Finance Minister yesterday talking about how the minimum wage is set based on “cost of living” and a livable wage level and so on -I just think that is silly. If you ask 1,000 people on the street if $7.75/hour is a ‘livable wage’ – I suspect that 999 would say no. It may be ok for a student wage or someone looking for a little extra income but a ‘livable wage’? No way.

Two, we already had one of the lowest rates of folks at the minimum wage in Canada. There was a study last year that confirmed this. We had an disporportionately large group of folks in the $8 – $10/hour range (I call this the call centre effect – it put upward pressure on service industries like retail and accommodation) and a much lower percentage at the high end. So raising the minimum wage to $7.75 is only going to impact maybe 15,000-20,000 people out of 350,000.

Three, I still don’t know what the CFIB’s weltanschauung is. On the front page of the newspaper saying this will have dire impact on the small business sector. What are we defending then, we we romanticize and use government policy to support the small business sector? If we are just trying to promote low wages, limited benefits, almost no training opportunities, no career mobility, etc. then why promote it at all?

I work for a small biz. I think the small environment can be fun and provide a flexibile work environment that large businesses can’t. I think small businesses play an important role in a healthy economic ecosystem (just as long as they are not over-represented in this ecosystem) filling in gaps not covered by larger players. Moving into niches and exploiting local market opportunities. Without small businesses, IMO, there would always be serious gaps in local services. In addition, some of these small guys (less than 1%) actually end up being big guys (entrepreneurs). But when its chief defender (the CFIB) is a) lobbying to keep wages low, b) lobbying to keep them from paying taxes and c) lobbying to ensure that they are not held to the same workplace standards as large businesses, what’s the point? If that’s the vision for small business, I say plow them all under and Walmartize the whole thing.