British Columbia’s lowest earners received good news last week as the provincial government announced they would be bringing in a larger-than-planned increase to the province’s minimum wage.
The increase will come in two stages to reflect the province’s overall economic growth and ensure all workers benefit from B.C economic success, according to the press release from the Office of the Premier on May 4th.
The first increase will be 40 cents and will bring the minimum wage up to $10.85 per hour, effective September 15th, 2016 with another increase of 40 cents the following September in 2017, bringing the minimum wage to $11.25. In addition, the province is investing $2.88 million in new training programs aimed at young people and small businesses to help with labour shortages in the province.
“One of the first actions I took when I became premier was to raise the minimum wage,” Premier Christy Clark said in the press release. “Raising the minimum wage twice over the next two years, coupled with some targeted supports for young people and businesses, will help everyone share in the benefits of our growing economy.”
Until this change, B.C. had maintained the lowest working minimum wage in Canada at $10.45 per hour (up 20 cents from $10.25 prior to September 2015). According to the B.C. Federation of Labour, there are approximately 110,000 people living on minimum wage across the province.
Last year, the B.C government announced a policy tying the minimum wage to British Columbia’s Consumer Price Index (CPI), which measures changes in the price for consumer goods and services. Based on British Columbia’s 2015 consumer price index, the minimum wage this year would have increased by 10 cents per hour.
The BC Chamber of Commerce voiced its concern at the larger-than-expected minimum wage increases because of its unpredictability for businesses’ budgets.
“The bottom line is that there needs to be certainty and predictability so that small businesses and businesses in general can plan for their labour costs,” said Susan Clovechok, executive director of the Columbia Valley Chamber of Commerce.
Despite the unexpected surprise that some small businesses may experience, Clovechok said this increase in minimum wage could be offset by the government’s reaffirmed commitment to reduce the small business tax rate by 40 per cent by 2017-18. This would mean that a small business that’s incorporated with $100,000 in active business income would have its taxes drop from $2,500 to $1,500, saving $1,000 annually.
MLA Norm Macdonald said that while he commends the government for taking a step in the right direction for the province’s lowest earning workers, there’s still more that needs to be done to make sure this rate eventually becomes a livable wage.
“I think in all the communities in B.C., the minimum wage, even with the increase, would be a very difficult sum of money to try and make ends meet,” he said. “There are a number of costs that are increasing and certainly 40 cents an hour is not going to keep up with that, but it is an improvement.”
Other organizations, such as the BC Federation of Labour, support Macdonald’s notion that the increase is merely a step in the right direction.
By the time the increase occurs, B.C. will have the seventh lowest wage in the country behind Ontario, Alberta, Manitoba and all three territories, and will be surpassed by Prince Edward Island in October when that province increases its minimum hourly wage.
“This is just one more missed opportunity for the premier and the government to do what’s right,” Irene Lanzinger, president of the BC Federation of Labour said in a press release. “A $10.85 per hour minimum wage leaves a full-time worker nearly $5,500 below the poverty line. That is simply unacceptable.”
Instead, the BC Federation of Labour advocates for a minimum wage of $15 per hour across the province, surpassing the next closest province or territory by nearly $2.
There is some merit to giving the economy’s lowest earners a more lucrative wage, according to a study by the International Monetary Fund. Looking at data from 159 different countries from 1980 to 2012, researchers discovered that when the poorest 20 per cent increase their share of the total income by just one per cent, the economy grows much faster in comparison to a greater income share to the wealthiest 20 per cent.
Although Macdonald thinks the government could have gone higher with the increase to provide a more livable wage, he said he understands that it’s a balancing act from the government’s perspective, trying not to disrupt economic growth. At the end of the day, the equation is simple for him.
“When the government does something that makes life better for people, that needs to be acknowledged.”