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Time To Consider A Tiered Minimum Wage

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by Graham Lane

Published in the Winnipeg Sun, February 2, 2018

Calls for a higher minimum wage continues. As does pressure for higher personal tax exemptions.  More affluent provinces have already boosted personal tax exemptions and are headed for a $15 minimum.. Support for both  is understandable  – the cost of living rises while disposable income is hurt by governments’ insatiable search for revenue. It is difficult to meet household bills for lower-skilled service workers.

Adults working in lower paying jobs (found in the fiercely competitive retail, accommodation, restaurant and theatre industries) can be the main income support for their families. Often low-wage jobs are the only employment available.  Better-paying manufacturing jobs have declined significantly with automation, further drops are likely.

Pushing up the minimum wage beyond what small and local firms can afford would result in layoffs and reduced employee complements. The Bank of Canada recently suggested that 60,000 jobs could be lost by major 2018 minimum wage jumps., And, what about young people seeking their first job or needing part-time to fund their education? If we insist on ALL jobs paying an ever increasing minimum wage, how will they do? Will they be priced out of the market? Is that something society should accept?

Manitoba only stopped having a two tier minimum wage in 1988. In the U.K., to  ether ensure young people are not priced out of the market, there are tiered minimum wage rates.  Here, fewer young people work in highly visible service jobs compared to other countries – like south of the border, where lower minimum wage rates generally reign.

The UK has four levels of minimum wages depending on age, with a fifth specifically for apprentices under the age of 19.  The lowest wage is for those under 18, while the highest is for those over 25. The C$ equivalent is $5.77 for high school students rising to C$ $12.36 for those over 25.

Should we adopt a similar structure – perhaps less stratified but with the same concept?  It could make it easier for employers to hire young people, while setting  higher wages for fully productive adults?

Minimum wages have escalated substantially. For instance, in 1967, the minimum wage was $1.00 per hour, which in today money is about $6.00 per hour.  Even more recently, 1997, the minimum wage was $5.40 per hour, which, applying inflation, works out to $7.80 per hour

Most who worked when in high school or university look back at their early working experiences as being important to their development, particularly as to learning work skills.  But, they also look back realizing that they were often not that productive and might never have been hired under the current higher minimum wage regime, let alone if $15 per hour.

If we continue to escalate the current one size fits all minimum wage beyond inflation, we will price young people out of the market. But, job experience is vital for young people. Time to consider returning to a tiered minimum? Our young need opportunities to enter the job market, and employers should not be pushed into reducing their staff.

Manitoba PC government should exercise leadership, and seriously consider tiered minimums. Ahead of that, personal tax exemptions should be seriously upped and indexed.

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