The Government of British Columbia has begun to discuss raising the minimum wage again. It was raised from $8.00/hour to $10.25/hour in 2011 and 2012. (The average hourly wage for a full-time retail worker was $19.20/hour in 2012.)

This is in the context of organized labour’s push for very substantial increases (which through ripple effects and contractual provisions can mean big increases for union members).

RCC is concerned that a sizeable hike in the minimum wage will result in a loss of retail jobs, a closure of retail businesses and an increase in youth unemployment.

Objectives:

  1. That Government introduces legislation to provide for an annual adjustment to the minimum wage based upon the B.C. Consumer Price Index, which measures the price of a standard basket of goods and services.
  2. That six months’ notice of any increase be provided to employers.
  3. That the annual effective date does not coincide with the Christmas shopping season and that it be harmonized as best as possible with effective dates in other provinces.
  4. Changes ought to be based on good public policy and objective data rather than politics. There is no place for a panel of government appointees.

Background:

British Columbia has a stated intention to harmonize employment standards and labour relations regulations with other provinces. Nova Scotia raises its minimum wage each April 1. Alberta raises its minimum wage each September 1. Saskatchewan raises its minimum wage each October 1. Yukon and Nova Scotia increase their minimum wages each April 1 based on their provincial Consumer Price Index. Alberta and Saskatchewan use their provincial Consumer Price Index and Average Weekly Earnings and provide about four months’ notice.

There appears to be a media focus and public discussion around the 7,700 minimum wage earners (out of 150,000) who are the sole bread-winner for their household. There is inadequate discussion about what the most appropriate public policies are to address this specific concern (for example, changes to income tax policy that could boost their take-home earnings). Increasingly, their cause has been adopted by big labour to enhance their argument for an increase in all wages – including those represented by unions – many of whom would receive a commensurate increase at the time of any increase to the minimum wage.

What the 7,700 out of 150,000 statistic actually shows is that very few minimum wage earners are the primary earner in their household. The largest single demographic group earning minimum wage are in fact young employees new to the workforce. Even for this group, there may be public policy measures that are more appropriate, for example, containing tuition fees, boosting student assistance, increasing education tax credits and raising the basic personal exemption for income tax purposes.

Current Minimum Wages:

British Columbia has the ninth-highest minimum wage in Canada – but in a tight bunch with all but three other provinces.

Provinces and Territories Minimum Wage
Ontario $11.00 / hour
Nunavut $11.00 / hour
Yukon $10.72 / hour
Manitoba $10.45 / hour
Nova Scotia $10.40 / hour
Quebec $10.35 / hour
Prince Edward Island $10.30 / hour
New Brunswick $10.30 / hour
Newfoundland and Labrador $10.25 / hour
British Columbia $10.25 / hour
Saskatchewan $10.20 / hour
Alberta $10.20 / hour
Northwest Territories $10.00 / hour

British Columbia raised its minimum wage in 2001 to $8.00/hour; on May 1, 2011 to $8.75/hour; on November 1, 2011 to $9.50/hour; and, on May 1, 2012 to $10.25/hour.

Average Weekly Earnings:

Contrary to popular belief, British Columbia has relatively low Average Weekly Earnings falling fifth among the provinces, or eighth amongst all provinces and territories.

Provinces and Territories Oct 2014 AWE
Northwest Terriroties 1,396.61
Alberta 1,172.33
Nunavut 1,158.93
Yukon 1,087.25
Newfoundland 1,003.45
Saskatchewan 985.29
Ontario 940.81
British Columbia 906.97
Manitoba 872.70
Quebec 857.67
New Brunswick 842.70
Nova Scotia 829.92
Prince Edward Island 782.76

Historical Consumer Price Index and Average Weekly Earnings Increases:

The change in the Average Weekly Earnings is nearly always significantly higher than the change in the Consumer Price Index. The CPI reflects a standard basket of goods; the AWE reflects a wide range of union and non-union, full and part-time earnings.

Year (Dec) CPI ChgCPI% AWE ChgAWE%
2001 97.7 656.92
2002 100 2.30% 682.79 3.79%
2003 102.2 2.15% 684.31 0.22%
2004 104.2 1.92% 706.21 3.10%
2005 106.3 1.98% 736.51 4.11%
2006 108.1 1.67% 759.64 3.04%
2007 110 1.73% 778.63 2.44%
2008 112.3 2.05% 783.79 0.66%
2009 112.3 0.00% 794.74 1.38%
2010 113.8 1.32% 818.1 2.86%
2011 116.5 2.23% 840.13 2.62%
2012 117.8 1.10% 864.25 2.79%
2013 117.7 -0.08% 873.14 1.02%
2014 119 1.09% 906.97 3.37%

The Current Situation:

The existing discussion is distorted by comparisons to the campaign for a $15.00 minimum wage by organized labour (who had in April 2014 campaigned for a $13.00 minimum wage) and recent referenda in large American cities.

How to decide on increases?

Some advocates call for the appointment of a “panel” to annually either decide upon an increase, or to confirm an increase created by a formula. This has the prospect of resulting in bad public policy where political factors triumph good decision-making.

Others prefer an annual increase based upon the provincial consumer price index (CPI), the provincial average weekly earnings (AWE), or a mix of the two.  Several jurisdictions have already moved to such regular, relatively predictable adjustments.

Should there be an increase prior to a formula coming into play?

Some advocates argue that since there has not been an increase in the minimum wage since May 1, 2012, that there needs to be a “catch-up” increase before an increase by formula comes into effect.

This would suggest that the three increases in 2011 and 2012 were not adequate for a few years, and that our existing rate is somehow uncompetitive with that of other jurisdictions.

What might have been the increase in the minimum wage had we been indexing increases against the CPI or AWE for the past 15 years?:

Year (Dec) Based on CPI Based on AWE Based on CPI/AWE
2001 8.00 8.00 8.00
2002 8.19 8.32 8.25
2003 8.37 8.33 8.35
2004 8.53 8.60 8.57
2005 8.70 8.97 8.84
2006 8.85 9.25 9.05
2007 9.01 9.48 9.24
2008 9.20 9.55 9.37
2009 9.20 9.68 9.44
2010 9.32 9.96 9.64
2011 9.54 10.23 9.89
2012 9.65 10.52 10.09
2013 9.64 10.63 10.14
Oct - 2014 9.74 11.05 10.39

The minimum wage would have increased to $9.54 (CPI), $10.23 (AWE) or $9.89 (combination of CPI and AWE) at the time the Government raised the minimum wage from $8.00/hour to $10.25/hour. It is striking how similar the increase is to the change in the Average Weekly Earnings – the more generous index.

What would a “catch-up” increase for 2015 be if the CPI and AWE were followed for the past 3 years?:

Year (Dec) Based on CPI Based on AWE Based on CPI/AWE
2011 10.25 10.25 10.25
2012 10.36 10.54 10.45
2013 10.36 10.65 10.50
2014 10.47 11.07 10.77

An increase based entirely on average weekly earnings would result in British Columbia having the country’s highest minimum wage above Ontario’s $11.00 per hour. Even the combination would be 30 cents higher than the current second-highest province, Manitoba.

If you have any questions or concerns, please don’t hesitate to contact: Greg Wilson, Director of Government Relations (B.C.), Retail Council of Canada, (604) 730-5254, [email protected].

[Consumer Price Index and Average Weekly Earnings data from Statistics Canada web site.  Minimum wage data from Retail Council of Canada web site.]

Retail Council of Canada