Alberta’s $15 minimum wage is good for workers and the economy

Alberta’s minimum wage reached $15 an hour on October 1, 2018. The Alberta New Democratic Party (NDP) government fulfilled its campaign promise by raising the minimum wage from $10.20 an hour in 2015 (tied for lowest in Canada) to $15 an hour (the highest in the country) over a period of 36 months—a 40 percent inflation-adjusted increase.

About one-eighth of employed Albertans, or slighltly more than 300,000 Alberta workers, benefited from the increase to $15 an hour.

I have been researching minimum wage for Parkland Institute for the past five years. In that time period, the general profile of minimum wage workers in Alberta has been fairly consistent:

• About 73% are in permanent jobs,
• About 57% have been in their job for over one year,
• About 71% are not teenagers,
• About 40% are parents,
• About 6% are single parents,
• About 62% are women,
• About 30% are the heads of their households,
• About 35% have a post-secondary degree, certificate or diploma, and
• About 60% work for companies with more than 100 employees.

During the 2019 spring election campaign, United Conservative Party (UCP) leader Jason Kenney claimed the minimum wage hikes in 2015–2018 caused significant job losses and reductions to workers’ hours of employment. In reality, Alberta’s accommodation and food service sector, where minimum wage jobs are concentrated, added jobs in 2016 (6,200 jobs), 2017 (1,300 jobs), 2018 (1,100 jobs), and 2019 (5,000 jobs).

Not only has the Alberta hospitality sector added jobs in each of the last four years, the latest available data from Statistics Canada show that in the third quarter of 2019 there were 19,245 job vacancies in sales and service occupations in Alberta. This is the highest number of job vacancies in Alberta of any occupational category.

Mr. Kenney’s claim about the supposed reduction of workers’ hours of employment is also not supported by data. In January 2019, ATB Financial wrote, “Workers in accommodation and food dropped from 24.5 to 23.4 hours a week [between November 2012 and November 2018].”

Despite the above facts, in May 2019 the newly elected UCP government fulfilled several campaign promises by passing Bill 2, An Act to Make Alberta Open for Business. Bill 2 reduces workers’ access to general holiday pay and overtime premiums, makes it harder for workers to unionize, and creates a youth minimum wage ($13 an hour for workers under 18 years old who are in school).

Labour relations professor Bob Barnetson analyzed Bill 2 and concluded it will reduce labour costs for Alberta employers, but there is no evidence or reason to believe that this transfer of costs to workers will result in an overall increase in employment rates in the province.

In August 2019, the UCP government appointed a minimum wage panel to “publish all of the available economic data on the labour market impact of the [2015-2018] minimum wage changes” and “assess whether hospitality industry workers who serve alcohol would benefit from a wage differential allowing them to work more hours.”

The UCP government’s wage cuts for minors as part of Bill 2 and for liquor servers (which seem imminent) are unfortunate because there are, in fact, many benefits to raising the minimum wage. Raising the minimum wage stimulates the local economy, because low-income earners spend most of their income, and chiefly in their community. Overall consumer spending power rises, as does the amount of money circulating in our economy.

Alberta’s 2015 to 2018 minimum wage increases significantly boosted the income of low-wage workers as a group and slowed down widening income inequality, especially as over 60% of Alberta low-wage workers are women.

It bears repeating that a living wage in Calgary and Edmonton is about $17 an hour, so the current provincial minimum wage of $15 an hour for adults and $13 for minors may not be quite enough for some households.

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Photo credit: Louis Hansel on Unsplash