Labour

Minimum wage suppression — right-wing dogma

The Economic Policy Institute (EPI) in Washington DC. is a nonprofit, nonpartisan group that advocates for fair pay and retirement security. In 2019, EPI economist Ben Zipperer appeared before Congress to testify about the U.S. federal minimum wage. He asserted:

  • Prior increases have had little to no negative consequences and instead have meaningfully raised the pay of the low-wage workforce.
  • The weight of recent evidence shows that minimum wage increases have worked exactly as intended, by raising wages without substantial negative consequences on employment.
  • The income-raising effects of the minimum wage significantly reduce the number of Americans in families below the poverty line. 
  • Minimum wage workers, and low-wage workers generally, are mostly adults and are also disproportionately women and people of color.
  • Had the minimum wage kept pace with labor productivity growth since 1968, this year it would be more than $20 per hour.

A 2017 analysis by The Bank of Canada suggested that planned increases to minimum wages would increase the consumer price index (CPI) by “0.0 to 0.1 percentage point.” The bank also said, “output should remain unchanged in the short run” and “longer-term effects are ambiguous.”

The Canadian analysis did add a concern that paying more to “low-skilled workers” could result in increased wage costs as higher paid individuals would likely seek to restore former wage differentials.

Groups like the Fraser Institute, Canadian Federation of Independent Business, and other organizations funded by wealthy business interests argue against higher minimum wages. They generally use highly simplified arguments like those taught in grade school economics about supply and demand. The claim is that higher prices mean lower demand, which means fewer jobs. However, we do not hear those arguments when remuneration of senior executives passes $10 million a year.

10 Years of Executive Compensation

Another thing not mentioned by opponents of higher minimum wages is that spending by people at the low end of the pay scale is immediate and local. Because they are not buying luxury foreign-made vehicles or chartering private jets, increases given low-wage workers are more certain to create demand-led growth in home communities. More demand, more jobs, right?

In fact, economic arguments matter little to wage suppressors. They hold a political philosophy that embraces “winners” and degrades “losers.” According to writer Jeremy Poxon, these:

Policy positions aren’t irrational or ill-conceived; instead, they’ve been very intelligently designed to manage and discipline low-income populations, while boosting the profits and position of the economic elite.

How Our Govt Help The Rich Get Richer And The Poor Get Poorer - New Matilda

Far-right BC Liberals refused to increase the minimum wage from 2001 to 2011, a period that saw 23% inflation. At the same time, Gordon Campbell’s government legislated tax cuts for the province’s wealthiest citizens and dramatically raised salaries paid Ministers, senior bureaucrats and crown corporation executives. (Reviewed here in my 2009 article.)

While the BC NDP deserves criticism on many issues—energy, climate, transparency—the party has a long history of improving the lives of low-paid workers. BC’s minimum wage moves to $15.20 on June 1.

This chart tracks BC minimum wages in the month of June:

Categories: Labour

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