Raise minimum wages and index them to inflation, says CCPA

CCPA says existing rates leave full-time, year-round workers $4,000 to $6,000 below poverty line


Toronto (27 March 2007) - Minimum wage rates should be raised to the poverty level at a minimum and increased automatically in the future to offset losses to inflation, says the Canadian Centre of Policy Alternatives (CCPA).

The centre says minimum wages are now so low across Canada that none are capable of lifting working Canadians out of poverty. (Since the 1990s, the federal government has not even bothered to set a minimum wage. Instead, it simply accepts prevailing provincial and territorial rates as the 'national' standard.)

Bringing Minimum Wages Above the Poverty Line, a new study prepared by the centre, says governments have allowed the value of minimum wages to be eaten away by inflation for too long. Since 1990, their real dollar value has flat-lined or increased only slightly in every Canadian province, it concludes.

“Depending on where you live, working at minimum wage full-time, all year round, will leave you $4,000 to $6,000 below the poverty line,” says Stuart Murray, a co-author of the study and a researcher with the CCPA’s B.C. office.

$10 minimum needed now

The study calls on provinces to raise minimum wages to $10 an hour (in 2005 dollars), just enough to raise a single person working full-time just above the poverty line. It also says indexing minimum wages to inflation is the only way to protect workers over the long-run.

“Indexing minimum wages to inflation would stop governments from playing political football with peoples’ livelihoods,” adds Hugh Mackenzie, a co-author of the study. “It would ensure the real value of minimum wages is never allowed to erode to such indefensible lows again.”

Last week, Ontario announced plans to increase its minimum wage to $10.25 by 2010, arguing a more rapid increase would mean substantial job losses.

But Mackenzie dismisses those claims:

“Don’t let anyone tell you the economy can’t withstand a decent minimum wage," he says. "This study reviews the evidence and finds that the minimum wage is, if anything, a bit player in determining employment levels. Ontario should move up its scheduled increases and then index to inflation.”

Raising provincial minimum wages would have a direct impact on the 19% of Canadian workers who currently make less than $10 an hour. Nearly half of them are over age 25, driving home the reality that this issue isn’t ‘just about teenagers’.

“This isn’t just a matter of principle,” says Mackenzie, “it’s a matter of financial survival for thousands of people and their families.”

The Centre recently released an Environics Research poll showing that 88% of Canadians support raising minimum wages to help reduce Canada’s growing income gap.

The National Union of Public and General Employees (NUPGE) has been among the most vocal groups demanding fair minimum wage laws in Canada.

More information:
Bringing Minimum Wages Above the Poverty Line
Canada's sad record on the issue of a federal minimum wage

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