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Letter to the Editor: Minimum wage indexing could be a danger to lowest-paid employees

['WS-xx-letter to the editor']
['WS-xx-letter to the editor']

Dear Editor, I write in response to Jamie Warren’s article in the Thursday (July 13) edition of The Western Star. (“Will raising minimum wage help or hurt low-income workers?”)

The circumstances of our lowest-paid workers remain a big concern for the New Democratic Party of Newfoundland and Labrador, so I would like to address some of the points in Mr. Warren’s article.

He refers to a study that looked at the Seattle experience of increasing minimum wage to $15 an hour. That study has received widespread criticism for “excluding data from some 40 per cent of the city’s workforce,” which led to misleading results, according to an article in the July 4 edition of The Toronto Star (“Economist group backs minimum wage hike”) and many other sources.

More than 50 economics experts from across Canada have signed their name to a letter supporting Ontario’s proposal to increase the minimum wage to $15 an hour by 2019. That letter, which your readers can find online at http://www.progressive-economics.ca/2017/06/29/economists-support-15-minimum-wage-in-ontario, outlines some of the solid reasons why increasing minimum wage is the right thing to do:

1.    Increasing minimum wage does not substantively reduce employment, according to the majority of studies done in the United States, and the few available for Canada.

2.    Raising the minimum wage has beneficial outcomes for business– the economists cite studies that find “lower turnover, more on-the-job training, greater wage compression (smaller differences between higher- and lower-paid workers) and higher productivity after minimum wage increases.”

3.    People opposed to increasing minimum wage always claim that skyrocketing prices will ensue. As the 53 economists remind us, the higher productivity levels mentioned above will actually mitigate some of a business’s increased hourly labour costs. There may be some minor cost increases resulting from making the minimum wage a living wage, but it’s not reasonable to keep the working poor in poverty indefinitely to prevent this from happening.

To the wise words of the economists, I would add this thought: People earning minimum wage will almost immediately put their pay increases back into the local economy. Our lowest-paid workers are not setting up overseas tax shelters, but rather use the increased income for the immediate needs of their families, which in turn is a benefit to the local business community.

Mr. Warren is correct that only about six per cent of Newfoundland and Labrador workers earn minimum wage, which is currently $10.75 an hour, rising to $11 in October. But one third of all workers in this province earn less than $15 an hour; this is much more than the Canadian number of 25 per cent. In our province, 60 per cent of those earning under $15 an hour are women – and a whopping two thirds of our minimum wage earners are women.

Mr. Warren suggests increasing government supports to low-waged workers to compensate for their below-poverty level pay. This would in effect be a subsidy of businesses who do not pay their workers enough to live on. I am a strong supporter of the social safety net, but I would suggest that there are better uses of scant government dollars than helping large retail chains, who are the biggest employer of minimum wage workers, save money on their labour costs.

Newfoundland and Labrador’s minimum wage is among the lowest in Canada. Our current Minister of Advanced Education and Skills has conducted a review, but addressed only the question of whether the minimum wage should be indexed for annual increases.

If the indexing kicks in with our current minimum wage level, we are dooming our lowest-paid employees to poverty forever.

Earle McCurdy, Leader

NL NDP

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