Is Alberta ‘closed for business’ because of the $15 minimum wage?

With a spring election expected to be called any day, United Conservative Party (UCP) leader Jason Kenney announced earlier today that, if elected, his party would introduce an "Open for Business Act" as its second piece of legislation, which would make changes in a number of labour laws, including calculation of holiday pay and the rules around union certification.

The proposed legislation would also reduce the minimum wage for workers 17 years of age or younger to $13 an hour, while maintaining the general minimum wage at $15 an hour.

Raising the minimum wage to $15 an hour was a key plank in the Alberta NDP’s 2015 election platform. At the time, Alberta was tied for the lowest minimum wage in Canada ($10.20 per hour) and had the dubious distinction of having the highest level of income inequality and the largest gender income gap. With staged, pre-announced annual increases from 2015–2018, the NDP government increased Alberta’s minimum wage to $15 an hour—the highest in Canada—as of October 1, 2018. Adjusting for inflation, this is about a 40 per cent increase over a 36-month period (not 50 per cent as stated in the UCP backgrounder to the announcement).

Today's announcement by the UCP also stated it would "appoint a minimum wage expert panel" to:

• consult with workers, employers, and policy experts
• analyse and publish all of the available economic data on the labour market impact of the NDP’s 50% increase in the minimum wage.
• assess whether hospitality industry workers who serve alcohol would likely generate higher net incomes (i.e. by working more hours) with a wage differential.

As of October 1, 2018, about one-eighth of employed Albertans earned $15 an hour, or slightly more than 300,000 Alberta workers out of a total of about 2.33 million employed Albertans. According to the Government of Alberta’s Alberta Minimum Wage Profile April 2017–March 2018, 71.2% of Alberta minimum wage earners are not teenagers, which is presumably why the UCP says it recognizes that reducing the general minimum wage is "not feasible."

It's also worth noting that while Mr. Kenney focused on the impact of the minimum wage increase on small businesses—holding his announcement at a local bakery and quoting the owners of a shawarma shop and a board game café in the release—as Parkland Institute has pointed out in an infographic challenging stereotypes about minimum wage workers, 59% of low-wage Alberta workers in 2018 worked for large corporations with more than 100 employees, not local mom-and-pop shops.

The following is a quick look at some of the key economic data on the labour market impact of the NDP’s minimum wage hike, including the impact on the hospitality industry (i.e., the accommodation and food service sector). 

While Mr. Kenney claimed in his announcement that "businesses have been forced to lay people off in order to keep their doors open," 2018 was the third straight year that Alberta raised the minimum wage and added accommodation and food service jobs. In 2016, with the provincial economy still in recession, Alberta’s accommodation and food service sector added 6,200 jobs. In 2017, the same sector added 1,300 jobs. In 2018, the sector added a further 1,100 jobs.

Last year, both Calgary and Edmonton added accommodation and food service jobs. According to the Government of Alberta’s 2017 Annual Alberta Regional Labour Market Review (the latest available annual review), the province’s two largest cities "accounted for 73.1% of Alberta’s labour force." Calgary added 9,500 accommodation and food service jobs in 2017 compared to 2016. Edmonton added 800 accommodation and food service jobs in 2017 compared to 2016.

While Mr. Kenney also claimed that "inflexible labour laws and regulation have led directly to reduced hours and layoffs," there has not been a significant decrease in hours worked per week by Albertans in the accommodation and food service sector in recent years. 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]."

In the third quarter of 2018, there were more vacancies in sales and services jobs (19,790) in Alberta than any other listed occupation, accounting for fully one-third of the 58,870 total job vacancies in the province. 

In sum, the data suggest that the minimum wage increases in recent years have largely been a success, have not been "a massive job killer," as Mr. Kenney has stated (and repeated today), and have not caused a large reduction in workers’ weekly hours of work.

It also bears repeating that even the $15 an hour minimum wage still falls short of a living wage in the province's two largest cities. Vibrant Communities Calgary, a non-profit organization working toward long-term strategies to address poverty in Calgary, used the Canadian Living Wage Framework to calculate that Calgary’s living wage for 2018 was $17.70 an hour. The Edmonton Social Planning Council, a non-profit organization working on poverty issues in Edmonton, calculated that Edmonton’s living wage for 2018 was $16.48 an hour.

Photo credit: Louis Hanel on Unsplash

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