An increase so small it keeps B.C. minimum wage workers in poverty : Policy Note

By Iglika Ivanova

September 20, 2016

Today, BC’s lowest paid workers get a 40-cent raise. The latest increase of the provincial minimum wage—now $10.85 per hour for most workers isn’t much to celebrate. It works out to an extra $16 per week for someone working full-time – and that doesn’t stretch far in a province with such high cost of living.

In fact, minimum wage workers continue to earn less than the poverty line even if they work full-time 52-weeks a year.

It’s not just minimum wage earners who face the threat of working poverty. Making a dollar or two above than the minimum wage is still a poverty wage for a full-time, full-year worker. Even three dollars above the minimum wage barely clears today’s poverty line for a single person, and falls short of the poverty line for a single parent with one child.

Nearly half a million British Columbians—a quarter of all paid employees in the province—work for $15 or less per hour. And they would all benefit from a $15 minimum wage.

Critics like to argue that the minimum wage doesn’t matter for working poverty because too few people earn exactly the minimum. But they seem to forget that nearly half a million British Columbians—a quarter of all paid employees in the province—work for $15 or less per hour. And they would all benefit from a $15 minimum wage.

Some people mistakenly believe that low-wage jobs are filled mainly by teenagers and youth who work part-time after school, live with their parents, and are on their way to a better-paying job after graduation. But Statistics Canada data reveal a very different reality for the low-wage workforce earning less than $15.

The majority of BC’s low-wage workers are adults between the ages of 25 and 64 (53%). Few are (21%). Most are supporting a household (58%). And most are women (58%). students

The majority of low-wage workers also have full-time jobs (59%), and just over half work for corporations with more than 100 employees.

And while there is some truth to the belief that for youth, low-wage jobs are a stepping stone to higher-paying careers, many low-wage workers over 25 face a real risk of getting stuck in their jobs with little opportunity to earn more. Almost half of BC workers over 25 who earn less than $15 have been in the same job for longer than three years (45%).

Studies also indicate that recent immigrants and persons of colour are likely to be overrepresented among the low-wage workforce.

BC’s economy relies on these workers but it’s failing to provide them with a path out of poverty. The consequences are far reaching: from chronic stress and health problems to poorer school performance for children – and, fundamentally, lost human potential. At the end of the day this isn’t just a problem for low-wage workers and their families – it affects us all.

It’s also why a growing number of cities in the US, including Seattle, San Francisco and Los Angeles are moving to a $15 minimum wage. Washington DC, New York State and California have also approved gradual increases to reach a $15 minimum wage, and a number of other states are considering similar measures.

Closer to home, Alberta’s provincial government officially passed regulations to raise the minimum wage to $15 by 2018, and is eliminating its lower “liquor servers” wage.

BC’s economy relies on these workers but it’s failing to provide them with a path out of poverty.

Any proposal to increase the minimum wage by any amount seems to be met with dire warnings of massive job losses and impending economic doom. But neither history nor academic research supports these claims.

Just last year, the CCPA published a report by UBC economics professor David Green, whose analysis indicates that the likely impact of a $15 minimum wage on job losses would be much lower than feared. His research found that the overall benefits of meaningfully raising the minimum wage through a series of staged increases would far outweigh the costs.

A $15 minimum wage would significantly boost the income of low-wage workers as a group and, unlike today’s small minimum wage increase, would be enough to lift full-time workers out of poverty.

An often-overlooked benefit of higher minimum wages is that they make low-wage, high-turnover business models more expensive, thus creating incentives for employers to offer better, more stable jobs.

The evidence is clear: sticking with BC’s poverty-level minimum wage just doesn’t make sense.

This piece was originally published in The Province.

Source: An increase so small it keeps minimum wage workers in poverty : Policy Note

2016 Federal Budget Analysis | Canadian Centre for Policy Alternatives

Commentary and Analysis

Organizational Responses

Source: 2016 Federal Budget Analysis | Canadian Centre for Policy Alternatives

Budget turns left but doesn’t step on the gas


March 22, 2016

OTTAWA—Today’s federal budget delivers on poverty reduction, makes important steps towards reducing inequality, and addresses decades of underfunding and neglect on reserves. However, delaying infrastructure and social program investments will not solve the problems of slow growth and high unemployment.

“This budget provides something that’s been missing for a long time: a real response to poverty and inequality,” says CCPA Senior Economist David Macdonald. “Today’s changes to the Canada Child Benefit and Guaranteed Income Supplement will have a big impact on reducing poverty for children and seniors.”

There are many welcome investments in today’s budget but CCPA economists say more spending is needed to boost Canada’s faltering economy. The projected deficit of just over $29 billion for both of the next two years—amounting to at most 1.5% of GDP—is relatively smaller than any federal deficit run between 1974 and 1996 and federal government spending as a share of the economy remains at near-historic lows.

“The Liberals are spending in the right places, but the amounts aren’t up to the task. The deficit is too small to really tackle Canada’s biggest economic challenges: unemployment and slow growth,” says Macdonald. “It’s important to remember that every deficit creates a surplus elsewhere in the economy. Every billion dollars in federal deficit means an extra billion in the pockets of Canadians through new transfers or higher wages, extra money for the provinces, and extra opportunities for businesses.”

Today’s budget implemented a large portion of the Liberal’s election platform but several promises were not addressed, including: closing the stock option deduction loophole, closing loopholes for small businesses, reducing subsidies for the fossil fuel industry, and implementing home care (although this may come in the future). The largest surprise is the carving out of major on-reserve commitments, which are positive, from money that would otherwise have gone to municipalities, which is negative.

“The Liberals’ first budget says it can, and does, move the needle on slowing growth in the first two years of this fiscal plan, creating tens of thousands of jobs in the process,” says CCPA Senior Economist Armine Yalnizyan. “Why do they then take their foot off the gas pedal and watch growth fall in the next two years of the fiscal plan?”

Economic growth forecasts continue to be downgraded, in Canada as around the world.  One of the key ways a government can counteract that trend is by investing in infrastructure. “The biggest surprise in today’s budget was the decision to back-end load infrastructure spending plans, which rise to their highest level in the Liberals’ second mandate, five years from now,” says Yalnizyan. “This five-year fiscal plan sees the federal contribution to the economy fall to the lowest level in over 60 years, as cities struggle to meet accelerating demands for affordable housing and public transit. We need the federal government to play a bigger role for more than a couple of years.”

The new federal government made a big splash last fall when Prime Minister Trudeau appointed equal numbers of women and men to Cabinet. The budget includes money to increase spaces in shelters for victims of domestic violence and support for the Inquiry into Missing and Murdered Aboriginal Woman and Girls. It lacks any significant investment in prevention measures.

“This government has made important symbolic commitments to improving women’s lives,” says Senior Researcher Kate McInturff. “What we don’t see in the budget is the money to back that up. With the addition of $3 million in 2016-2017 and $5 million in 2017-18, the budget for Status of Women accounts for a paltry 0.016% of total federal program spending in both years. That’s not going to buy real change for women in Canada.”

Source: Budget turns left but doesn’t step on the gas: think tank | Canadian Centre for Policy Alternatives

Canada’s wealthiest 86 residents so flush they could buy New Brunswick: study

A new analysis of the 86 wealthiest Canadian residents reveals they have so much money they could buy the province of New Brunswick and still have cash to spare, says the Canadian Centre for Policy Alternatives (CCPA).

Outrageous Fortune: Documenting Canada’s Wealth Gap, by CCPA Senior Economist David Macdonald, finds Canada’s Wealthy 86 increased their net worth from $118 billion in 1999 to $178 billion in 2012—a 51% increase (in 2012 dollars).

“Canada’s Wealthy 86 represent only 0.002% of the population but they’re so flush they could buy absolutely everything owned by every person in New Brunswick,” says Macdonald. “They could buy up all of New Brunswickers’ cars, all of their houses, all of their undeveloped land, all of their stocks, bonds, pension funds and RRSPs, all of their jewelry, all of their furniture—everything—and still have billions to spare.”

Key findings in the study include:

  • Canada’s wealth gap is bigger than its income gap. The richest 20% of families take almost 50% of all income but when it comes to wealth, almost 70% of all Canadian wealth belongs to the wealthiest 20%.
  • Canada’s Wealthy 86 held the same amount of wealth in 2012 as the bottom 11.4 million Canadians combined – up from 10.1 million Canadians in 1999.
  • Only 10 of Canada’s 100 highest paid CEOs are part of The Wealthy 86 in 2012 and every one of those 10 either founded or is related to the founder of the company they’re heading.

“The very wealthy got that way by creating or trading assets, usually companies or real estate,” says Macdonald. “When they make money trading assets, those capital gains are taxed at only half the rate of what a working Canadian would pay in income taxes on the same amount.”

In order to help narrow Canada’s wealth gap, the analysis recommends a higher inclusion rate on capital gains and higher income taxes at the top of the income spectrum.

“There are few direct taxes on wealth in Canada. A fairer inclusion rate for capital gains would help offset the flood of wealth that is accumulating in the pockets of Canada’s wealthiest and ensure some of those benefits are returned to the majority of Canadians,” Macdonald concludes.