Nova Scotia Minimum Wage Increase

The Minimum Wage Review Committee Department of Environment and Labour released a report today that advises an increase in the minimum wage from $7.15 to $7.60. I urge the Minister to refrain from giving into the illusory benefits of the situation and decline.

Someone needs to do the math. The press release claims 26,700 who work minimum wage. Assuming fifty 40-hour work weeks per year, employers currently budget an aggregated $381,810,000 wage pot for the pay of these workers.

The big news flash is that raising the minimum wage does not proportionately jack up the budget for wages. An increase of 6% per hour does not mean employers will be forced to increase the wage pot 6% to $405 million. Take your pick: think like a hard-pressed small business owner or an evil corporate HR executive.

It's more likely that the wage pot will be more or less the same next year. So $382 million will be split among $7.60 earners, 40 hours, 50 weeks, leaving 25,100 minimum wage workers. Would the Minister dare ask 1,600 Nova Scotians to lose their jobs?

The minimum wage committee recognizes this in the report:

Several recent studies have been completed for the Federal Labour Code review, notably those completed by Professor Morley Gunderson, Chair of the University of Toronto Economics Department. He estimates that for every 10% increase in the minimum wage, there is a 3% increase in the unemployment rate, mostly impacting youth employment.

The committee however, sidesteps this by suggesting that "programs" can be implemented to mitigate that effect. Easy for them to write. Just what government programs live up to what they're sold as?

My figures are not exact as the inputs are much more complicated, but the principle holds. Unfortunately for the minister, the electoral system seem to demands it. 25,000 primary benefactors and legions of economics ignorant voters are more likely to support him, outnumbering the 1,000 displaced (who will probably blame their employers instead) and the thin ranks of basic economic theorists.

It is the job of ministers to make the tough decisions that are required to protect minorities. The opposition will not fight for them. The media will not fight for them. Most voters will not fight for them. Will the minister fight for these already disadvantaged Nova Scotians?

Jon N

Posted by Jon N at January 9, 2007 10:10 PM