Minimum-wage workers deserve better

Prior to the United Conservative regime, Alberta’s provincial government raised the minimum wage every fall from 2011 through 2018.

October 1 marks the second straight year that Alberta’s United Conservative government has not increased the provincial minimum wage, meaning the wages of almost 300,000 workers are losing value against consumer price inflation.

About one-eighth of Alberta workers make minimum wage. Freezing their wages is not good for our economy because it reduces consumer spending in local communities. It also forces many employed Albertans to rely more heavily on the government and the charitable sector for assistance to make ends meet.

On top of freezing the general minimum wage, in mid-2019 the Jason Kenney-led United Conservative government passed Bill 2, which reduced the minimum wage for workers under 18 years old who are in school to $13 an hour. About 70 per cent of Alberta’s minimum wage workers are not teenagers; nonetheless, the United Conservative’s creation of a two-tier minimum-wage system is a subsidy to low-wage employers. It also violates the principle of equal pay for equal work and denies the reality that teenagers have bills to pay and family finances to contribute to.

Teenage minimum wage workers deserve better; indeed, all Alberta minimum-wage workers deserve better.

This blog asserts that Alberta’s minimum wage should be a living wage of $17 an hour, especially during a pandemic.

The blog proceeds as follows: I examine the Alberta New Democrats’ $15 an hour minimum-wage initiative and the (misplaced) criticisms of it; I outline who makes minimum wage in Alberta; I examine Alberta employment levels during COVID-19; I analyze Alberta consumer spending levels during COVID-19; and I assert that all Alberta workers need and deserve a living wage, and I explain the benefits of raising the provincial wage floor.

Alberta’s Move to a $15 Minimum Wage

Despite starting Alberta’s annual practice of increasing the minimum wage in 2011, the former Progressive Conservative government kept the provincial wage floor very low. When Rachel Notley and the Alberta NDP won the 2015 election, Alberta’s minimum wage was tied for the lowest in Canada at $10.20 an hour (and $9.20 for employees serving liquor).

Having a low wage floor in Alberta was unfair to minimum-wage workers because Alberta’s overall labour force has had the highest average incomes in Canada for over two decades. Some Albertans were being left behind while others were enjoying incredible prosperity.

The Alberta NDP raised the wage floor to $15 an hour with staged hikes over a 36-month period (they also eliminated the lower wage for liquor servers). Alberta’s general minimum wage has been $15 an hour since Oct. 1, 2018 (a 40 per cent inflation-adjusted increase from 2015).

The Alberta NDP’s actions generated some bold predictions, false statements by political opponents, and the proliferation of myths of who makes minimum wage (outlined in the next section) and whether minimum-wage hikes correlate with employment effects (i.e. job losses or gains).

For example, in a February 2019 election campaign speech to restaurant owners, Alberta’s then-opposition leader Jason Kenney said, “The truth is the NDP raising wages during the middle of a recession, including on teenagers in entry level positions, was a massive job killer.”

History, however, doesn’t back up Mr. Kenney’s sky-is-falling claim. In 2016, with the provincial economy still in recession, Alberta’s hospitality sector added 6,200 jobs. In 2017, the same sector added 1,300 jobs. In 2018, the sector added a further 1,100 jobs, and in 2019 the sector added another 5,000 jobs.

In reality, minimum-wage increases tend to result in a small percentage of teens losing their jobs, while losses for adult workers are effectively zero. Because the vast majority of minimum-wage workers are necessary to businesses, if employers must cut, they lay off their least-experienced employees.

Now that I’ve established that past minimum-wage hikes have not led to significant job losses, let’s turn to the topic of who makes minimum wage in Alberta, because the UCP government’s two-year minimum-wage freeze is affecting real people who are struggling to make ends meet.

General Profile of Alberta’s Minimum-wage Workers

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

The United Conservative government’s two-year minimum-wage freeze is hurting a large group of workers who are mostly women, who have significant work experience, education and job tenure, many of whom are parents and heads of their households, and who mostly work for businesses with more than 100 employees.

COVID-19 and Employment in Alberta

Total employment in Alberta was 176,900 jobs lower in August 2020 compared to a year earlier. Some of these jobs were lost before the pandemic hit the province in March, but the fact remains that because of the COVID-19 public health crisis we’re down a lot of jobs in wild rose country, just as the rest of Canada is down a lot of jobs.

Most of the Alberta jobs lost in recent months have been in sectors that predominantly employ women. The two sectors with the most job losses are the hospitality sector and the wholesale and retail trade sector. Some jobs in these sectors pay higher than minimum wage, but generally speaking, minimum-wage jobs in Alberta and elsewhere tend to be hospitality and retail jobs.

Jobs in Alberta’s hospitality sector dropped by half in March and April (79,300 job losses). By the end of August, the sector regained 37,000 jobs, or almost half of the jobs lost in the spring.

Alberta’s wholesale and retail trade sector also lost over 75,000 jobs in March and April. By the end of August, the sector regained more than 55,000 jobs, or about three-quarters of the jobs lost.

COVID-19 and Consumer Spending in Alberta

It may surprise many Albertans that after the initial economic shock of COVID-19 from mid-March to mid-April, consumer spending in the province started to rebound and by late May it was above pre-pandemic levels.

According to ATB Financial, Alberta consumer spending “was higher than it was in 2019 in both June and July by 4 per cent, but was down in August by 4 per cent.”

The rebound in consumer spending has not been the same across all sectors of the economy, but the bounce-back in total consumer spending is an encouraging sign because, as about half of our overall economy, it’s actually the largest part of our economy by expenditure.

Retail trade is one sector of Alberta’s economy that has seen its total sales increase in recent months on a year-over-year basis.

With the exceptions of grocery, convenience, liquor and cannabis retailers, whose sales didn’t suffer in the early weeks of the pandemic, and the surge in sales at e-commerce retailers, the Alberta retail sector overall saw their sales drop 28 per cent in April compared to February.

But then our economy started to open up again, and overall retail sales bounced back. Retail sales in June were four per cent higher than June 2019, and retail sales increased again in July by 1.2 per cent.

Restaurant and bar sales in Alberta have also rebounded in recent months, but not as well as the bounce-back in total consumer spending and in retail sales.

Restaurant and bar sales plunged 59 per cent between February and April, but then this sector was allowed to re-open at half capacity in mid-May and these restrictions were lifted a month later as long as public health guidelines were followed. Sales increased 39 per cent in May, another 31 per cent in June, and another six per cent in July. In sum, the July sales total was 21per cent lower than last year.

Monthly consumer spending and retail sales have bounced back to pre-pandemic levels, and restaurant and bar sales have rebounded to be about 80 per cent of mid-2019 levels.

Public health guidelines, increased unemployment and fewer tourists have contributed to this reality for restaurants and bars. It is possible that COVID-19 has permanently changed the restaurant and bar industry. The Alberta government should inquire into this possibility and what, if anything, might be done for the industry. For example, the rise of gig jobs in food delivery may require updated rules and regulations to improve the quality and pay of delivery jobs, and it may be that food ordering apps need to be regulated so they are not allowed to take too big a percentage of sales from restaurants.

The United Conservative government should also ensure all Alberta workers make a living wage, and it is to that topic I now turn.

All Albertan Workers Need and Deserve a Living Wage

In September 2020, the United Conservative government stated that “[a]lmost 90 per cent of women aged 15 and older in Alberta are employed in the services-producing sector such as retail and hospitality services.” That is to say, most minimum wage workers are women and most workers making a bit above minimum wage are also women.

In the ongoing COVID-19 public health crisis, the mostly female sales and service workforce have (finally) been recognized as essential to the functioning of our economy. While recognition is nice, lip service doesn’t pay the bills. It is unacceptable that Alberta’s mostly female sales and service workers are paid less than a living wage, especially during a pandemic.

The non-profit Vibrant Communities Calgary explains the term “living wage” is “a proxy for the cost of living in any given community.”

In 2019, a living wage in Edmonton and Calgary was about $16.50, according to non-profits who work toward eliminating poverty in the two cities. These living wage calculations are based on a four-person family with both parents working full time. Many of the people listed in the minimum-wage worker profile above don’t fit the picture of having both parents working full time. For example, a single mother would have to earn a much higher wage to have the same level of income as the four-person family scenario.

Factoring in the last year of consumer price inflation and the fact that most low-wage workers don’t have health, dental and vision benefits through their employer, it is fair to say a living wage in these cities is over $17 an hour. So Alberta’s general minimum wage of $15 an hour falls short of the cost of living, and the $13 an hour wage for workers doing the same types of jobs while being under 18 years old falls short of the cost of living by a lot.

The two-year minimum-wage freeze from Mr. Kenney’s government means these essential, mostly female workers are falling further behind.

And yet, every shift this mostly female workforce are interacting with customers and, during a public health crisis, that means every shift these workers are exposed to the risk of becoming sick. This is a serious occupational health and safety issue, and minimum-wage workers should be compensated for the constant threat in the workplace to their health.

On top of their stagnant wages, low-wage workers and other vulnerable Albertans are bearing the brunt of the UCP’s austerity agenda, while large corporations have received a 33 per cent tax break from the Kenney government.

Albertans deserve jobs that pay a living wage, and we deserve quality, comprehensive public services all the time, and especially during a pandemic. The Government of Alberta, however, is not meeting its responsibilities to Albertans in these and other regards.

Eliminating the discriminatory teenage wage and increasing the general minimum wage could be an important social program for the provincial government.

Earning a living wage means workers are better able to afford the necessities of life, including healthier food for their children and themselves.

Raising Alberta’s minimum wage to a living wage will also help to reduce the province’s gender income gap, which is the largest in Canada. Putting more money in the hands of women to spend in their local communities could bolster Alberta’s economic stimulus strategy.

When the minimum wage is lower than a living wage, low-wage workers end up engaging more with various government and non-profit social services and assistance programs. So keeping the minimum wage below a living wage is effectively a subsidy to low-wage employers.

Furthermore, freezing the minimum wage below a living wage, as the Kenney government has done, means workers are more likely to go to work sick because they can’t afford to lose any wages. Alberta consumers may then buy their groceries or restaurant meal with a side of coronavirus.

On the other hand, higher wages lead to stronger consumer spending. If the Kenney government reinstates the annual increase to the minimum wage and incrementally raised Alberta’s wage floor to a living wage of $17 an hour, these policy moves would help stimulate our local economies because low-wage workers spend all of their income and chiefly in their local communities.

Alberta’s underpaid essential workers deserve nothing less than a living wage, especially while they are serving Albertans during a pandemic.