Lowest minimum wage in Canada to become highest
$12.50 an hour starting June 1 still less than what many Yk employers already pay
Walter Strong
Northern News Services
Published Friday, January 16, 2015
SOMBA K'E/YELLOWKNIFE
A politician, labour advocates and free enterprise defenders walked into a room to sort out a new minimum wage for the Northwest Territories. When they came out of the room, they all agreed on one thing. The NWT should have the highest minimum wage in the country.
NWT Chamber of Commerce executive director Mike Bradshaw, left, Mira Hall, Centre for Northern Families manager of child and family programs, Minister of Education, Culture and Employment Jackson Lafferty, and Ben McDonald, representing Alternatives North, posed for a photo after Lafferty announced a new NWT minimum wage of $12.50 per hour effective June 1. Bradshaw, Hall and McDonald were part of the seven member minimum wage committee that advised Lafferty. - Walter Strong/NNSL photo |
Education, Culture and Employment Minister Jackson Lafferty announced last Wednesday that, effective June 1, the minimum wage in the NWT will be $12.50 per hour.
If nothing changes between now and then with minimum wages in other provinces or territories, the NWT will have the highest minimum wage around.
In making his decision, Lafferty selected one of three recommendations made by a committee struck in 2013 to examine the territory's minimum wage, which has been $10 per hour since April 1, 2011.
Inflation and the general rise in the cost-of-living have eaten away at the value of that minimum wage. According to background information provided by the GNWT, $10 in 2011 is $9.30 in today's dollars.
At $10 per hour, the NWT's minimum wage is the lowest in the country. At the same time, the NWT has the highest average weekly wages in the country, according to Statistics Canada.
"It was definitely time to do something for those folks who are really low-wage income earners," said Mike Bradshaw, NWT Chamber of Commerce executive director and minimum wage committee member.
"It makes the NWT a leader with regard to minimum wage management."
The committee was made up of representatives from the GNWT and business, social and labour advocates. The seven-member committee included Bradshaw, Alternatives North's Ben McDonald, and former Northern Territories Federation of Labour president Mary Lou Cherwaty.
The committee presented Lafferty with three recommendations to consider for his final decision.
One option was for a "living wage" in the vicinity of $19 per hour. A second option was to introduce a minimum wage base rate with ongoing adjustments for economic indicators like the consumer price index.
A third option - the one selected - was to set the new minimum wage at a percentage of the average hourly wage in the NWT.
The committee selected 45 per cent of average hourly wages as the minimum wage target. This, according to background material provided by the GNWT, brings the NWT into line with Canadian, territorial and provincial minimum wages as expressed as a percentage of the average hourly wage within those jurisdictions.
The average hourly wage in the NWT is $27.80 per hour, the highest average wage in the country. According to the formula, the NWT should have the highest minimum wage.
Minister Lafferty said the new minimum wage will hopefully encourage some who have given up on the job hunt because the minimum wage is too low. It could also, he said, encourage some to move to the North.
"With the high cost-of-living, we feel that if we increase (the minimum wage) we'll be attracting more individuals willing to work in those positions," Lafferty said.
"I'm (also) optimistic we'll be attracting more community members to enter the workforce," he added.
"Those individuals who are currently in the system at $10 per hour should be
happy as well."
It isn't known exactly how many minimum wage earners there are in the NWT.
Statistics show fewer than 1,000 people in the territory make between $10 and $12.99 per hour, with 600 of those living outside of Yellowknife.
In an informal survey of local business owners, Yellowknifer was unable to identify any employers paying the current minimum wage.
"We are paying way more than minimum wage," said Rami Kassem, co-owner of Javaroma Gourmet Coffee.
"For us, as Javaroma, it doesn't affect us at all."
Suzanne Desfosses, owner of the local Tim Hortons, said even the most inexperienced, part-time student employee would start at more than $10 per hour.
"We don't have anybody currently at minimum wage," Desfosses said. "(As for) the proposed minimum wage, most of my people make more than that."
"As an industry we were ahead of the government on this," she added. "Everybody knows it's expensive to live up here."
But assuming there are people making less than $12.50 an hour, some employers will have to decide whether to pass the cost on to
consumers.
Bradshaw doesn't expect a substantial impact on the cost of living in the North thanks to any potential increased cost of doing business.
"We drilled deep into the data to find out who was going to be affected and how many would be affected," Bradshaw said. "It's going to have an imperceptible impact on the economy, but it will be an important benefit to those who will see an increase to
$12.50 per hour."
Alternative North's Ben McDonald, who was part of a working group last summer calling for a "living wage" of approximately $19 per hour, said the minister made a good decision within the competing political constraints of social policy and business concerns.
"A two-and-a-half dollar per hour wage increase is a significant jump, and it takes courage to do that," McDonald said. "People who are already working are going to get a much needed boost, and it's potentially going to make (employment) more feasible for people who are not working because the (current minimum) wage is not worth it considering all the other costs they are facing."
McDonald remains on the minimum wage committee which will revisit the issue every two years going forward. He said he will continue to advocate for the living wage solution.
Not all commentators were pleased with the wage hike.
Amber Ruddy, NWT senior policy analyst with the Canadian Federation of Independent Business (CFIB), said the new wage is the wrong direction for the GNWT to take.
"If this is a poverty reduction measure, this is not the best approach," Ruddy said.
"(The GNWT) should really be looking at the basic personal (tax) exemption," she added, suggesting that a decrease in the tax burden low-wage earners carry would do more for them than an increase in the minimum wage.
According to Ruddy, data shows raising the minimum wage can have negative effects on small business.
"This is the government deciding on the back of small business that it wants to have this measure, and it can have devastating impacts," Ruddy said.
"It makes employers look at their staffing costs and reconsider future hiring," she said.
She discounts the argument that having the highest minimum wage in the country will attract workers to the North.
"If somebody is going to be moving to the territories, it's usually not for minimum wage," she said.
Ruddy added that an increased minimum wage can't help but raise expectations of pay raises across the board.
