Businesses should not fear $15 minimum wage

EDMONTON, ALBERTA--(Marketwired - June 29, 2016) - Despite a concerted campaign of fear and misinformation from certain employer groups, there is every reason to believe that Premier Rachel Notley's plan to increase the minimum wage to $15 in stages by 2018 will actually be good for Alberta businesses.

"Transforming the minimum wage into something closer to a living wage will allow the 340,000 Albertans who currently earn less than $15 an hour to participate more fully in the consumer economy. It's actually good for business," Alberta Federation of Labour president Gil McGowan said.

"Increasing the minimum wage to a point where people working full-time hours can afford to live above the poverty line will be an example of a rising tide lifting all boats."

Because low-income workers are the likeliest to need the money, they are the likeliest to spend it. This means that the money they earn is returned to the economy very quickly, and local businesses reap the rewards.

"What anxious employers often forget is that one company's employee is another company's customer," McGowan said. "If 20 per cent of Alberta workers are earning poverty wages, that means that 20 per cent of Alberta workers are not participating fully in the economy as consumers."

Research released by the Alberta Federation of Labour this week shows that the increased consumer spending that would result from a $15 minimum wage would amount to a $900 million boost to the Alberta economy over three years.

"When there are hundreds of thousands of workers who aren't earning enough to get by, that hampers the economy," McGowan said. "The idea that a higher minimum wage would boost the economy, rather than harm it, is not a radical idea. Mainstream economists have been making this argument for years. And it's borne out by the evidence."

The AFL research paper used analysis methods from the Federal Reserve Bank of Chicago applied to data from Statistics Canada's Labour Force survey for Alberta. Breaking down the number of workers in Alberta by hourly wages, the report examines how much extra money each group would earn in a given week, and how much extra they would be able to spend in the Alberta economy.

"When you look at the meta-analysis of studies done that look at the effect of minimum wage increases on employment, time and time again, you see that none of the catastrophic impacts predicted by low-wage employers have come to pass," McGowan said.

"The bottom line is that increasing the minimum wage to something close to the living wage is a win-win for both workers and the economy."