Neiman: On minimum wage, every dollar spent

Maybe your business model is wrong

Neiman: On minimum wage, every dollar spent

I can remember a time not too long ago in Alberta, when workers with minimal training and not much experience would refuse to crawl out of bed for a job that paid less than $80,000 a year — not counting substantial overtime.

I recall the stories from young members of my family living in the northern part of the province of friends working the fast food business, who would simply walk out their employer’s door to the restaurant down the street, and sign up for better pay — no interview required.

Good times, right? During the boom, even small Alberta businesses managed to make money paying their workers substantially more than the new minimum wage of $12.20 an hour.

I don’t recall the price of a burger and fries or a double-double dropping that much since oil dropped below $50 a barrel. But it seems now that it has, minimum wage seems too much to pay for many Alberta small business owners.

The Federation of Independent Business has pulled out the same notes they used five years ago, to warn of rampant business closures, or of drastic cuts in jobs or hours, if the legal minimum wage should ever be raised.

News outlets like the Globe and Mail gave them plenty of space to argue that now is not the time to make a law such that people working full-time could actually live on their salary. Not that $12.20 an hour is a living wage in most Alberta cities, but that point has been lost in the rhetoric.

Besides, we were told, while reading from the old notes, Alberta has very few workers earning minimum wage, and anyway, they are mostly teenagers living free in their parents’ homes.

Well, back in 2010, Alberta did only have 22,200 workers on minimum wage, according to Stats Canada. But by 2015, that number had blown up to 51,600.

And according to Alberta Labour Department figures, more than 296,000 Alberta workers earn less than the nominal living wage of $15 an hour — the minimum wage mandated for Oct. 1, 2018. Right now a living wage is calculated to be $17.29 an hour in Calgary.

Almost 80 per cent of minimum wage earners work permanently on minimum wage in Alberta, while 54 per cent of them work full-time, and 38 per cent of them have children to support. Not surprisingly, 62 per cent of them are female.

But this is not just a small business problem. Government figures say 58.5 per cent of people on minimum wage work for employers with more than 100 workers.

The point which could have been stressed five years ago when the small-business case was last being made, is this: if the success of your business model includes paying wages that require a full-time employee to rely on the Food Bank month to month, maybe it’s your business model that’s wrong.

The grocery store managers and thrift store workers in Alberta all know exactly when government support cheques come out every month. They can track the date by their sales figures.

A basic text on economics will tell you that every dollar in an economy will eventually be spent. It’s a rule. For people on the bottom end of the wage scale, every dollar that is earned is spent locally. That’s a rule, too.

Differently stated: if a poor person gets another dollar, it doesn’t take long for a rich person to obtain it.

So the business case that has been made over and over again, against expecting employers to support a fair minimum wage, has not been convincing.

All the money workers earn gets spent (and for many, spent and then some). All the places where that money is spent is owned by business owners. The money goes round and round. Watching that occur is called economics.

In a time when disparity of income between the rich and the poor has become the root of some rather dismal politics in North America, I fail to see how the moral importance of workers being able to live on their pay levels is somehow wrong.

Especially when it’s absolutely known that when there’s more money at the bottom, it just flows upward all the faster.

Follow Greg Neiman’s blog at ReadersAdvocate.blogspot.ca