This is the 15 Dollar Minimum Wage Argument?

Here is the latest argument being made to promote the 15 dollar minimum wage.

Employers should simply pay their employees more. This will help solve our economic problems. With a 15 dollar minimum wage there will more money being spent. People on lower incomes will be spending all this money because they can’t afford to save it. Consequently, people will sell more goods and services and we will all prosper.

In a recent Global News piece, Christine Saulnier from the Canadian Centre of Policy Alternatives said, “If we are putting money into the pocket of those who are the lowest waged workers in our economy, they actually have this pent-up demand, they actually need to spend it. They’re not going to save it and take it out of the economy, they’re going to spend it.”

If this is the only issue, why don’t we raise the minimum wage to $100 per hour? That way, everyone will have enough money for all their needs, small businesses will be rolling in cash from the jump in domestic demand, people will have lots to put in their retirement plans, the real estate market will boom, imagine how quickly our teenagers could save for university…what possibly could be the downside?

Well, the reason this isn’t happening is because businesses operate by creating value through effort. If the cost of creating a product or service is higher than what it can sell for, the business will operate at a loss and it won’t last long. Those employees are subsequently thrown out of work. This is especially true for small businesses.

Advocates suggest however those small businesses should be given a pass and only the Walmart’s and Loblaws of the world forced to pay a 15 dollar minimum wage. This idea was actually in the provincial NDP’s last election platform. The sentiment is a nice one, mom and pop shops aren’t forced to pay unaffordable wages but the problem here is, how will this torque the labour market?

How will the small locally owned gas station or convenience store find workers when Sobey’s owned Needs or Superstore Gas Bar pays 3 dollars more per hour? Or will those larger companies simply automate and eliminate these jobs altogether?

The minimum wage debate is complex and it is an economic balancing act. Understanding the value of labour against demand and impact on costs seems to be totally lost in this discussion.

Another argument being floated is workers will migrate out of Nova Scotia because other provinces have higher minimum wages. Our young people didn’t leave in droves for another 3 dollars per hour, they left because the average income in Fort McMurray was $100,000 dollars.

Sixty percent of minimum wage earners are students, living at home and not a primary income earner in a household. If we want to do something to improve the lives of low-income earners, let’s create a stronger economy with good-paying jobs and help those folks improve their skills so they can participate fully. Forcing businesses to contract or shutter due to arbitrary labour cost increases accomplishes none of that.

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