Feature Spotlight

Feature SpotlightFeature

Understanding minimum wage in Alberta

Thursday, June 11, 2015

Inflation of prices to cover
increased labour costs
Replacement of workers
through automation
Before-tax minimum wage rate
The Government of Alberta has outlined a plan to raise Alberta’s minimum
wage from the current rate of $10.20 per hour to $15 per hour by 2018. At the
Calgary Chamber we believe alleviating poverty and ensuring that all Albertans
are paid a fair wage for a day’s work are important public policy concerns; ones
that are nuanced and should be subjected to thorough analysis and frank
dialogue. A change in minimum wage can have wide-ranging implications for
families, businesses, employment and overall economic growth. These potential
implications, and the nuances associated with them, need to be reflected on
when considering reforms. Together with the Government of Alberta we
look forward clarifying what problem we are trying to solve, and
what the best course of action is.
Small businesses and non-profits are especially vulnerable to any changes to
the minimum wage. The dialogue on this issue must therefore also include a
discussion on how to ease any negative economic implications it may cause.
Mitigating strategies are a vital component of any new policy framework for
the minimum wage.
Ideas worth exploring include establishing “minimum compensation” models
which take into account benefits provided by employers not entirely captured
in their wage. A strict wage threshold may disincentivize businesses from
offering additional employee benefits. Prolonged and flexible phase-in periods
are also key in helping small businesses and non-profits with limited resources
and flexibility comply with changing regulations. Establishing a lower
minimum wage during training periods may also be beneficial in mitigating job
insecurity for young and low-skilled workers.
Any changes to the minimum wage must strive to maximize help for
vulnerable populations, while minimizing negative impacts on an already
fragile economy. Frank and evidence-based discussions are the cornerstone
of any effective and successful policy.
Understanding minimum wage
in Alberta
$8.00 $9.00 $10.00 $11.00 $12.00 $13.00 $14.00 $15.00 $16.00
Proposed $15.00
ON $11.00
MB $10.45
NS $10.40
QC $10.35
PE $10.35
NL $10.25
BC $10.25
AB $10.20
SK $10.20
NB $10.00
After-tax minimum wage rate
$8.00 $9.00 $10.00 $11.00 $12.00 $13.00 $14.00 $15.00 $16.00
Proposed $13.30 (approx.)*
ON $9.52
AB $9.00
BC $8.82
SK $8.73
QC $8.63
NL $8.47
NB $8.45
MB $8.41
NS $8.39
PE $8.25
Industry
Retail
trade
Accommodation
and food services
20.9%
28.8%
Education
Some
high
school
High
school
graduates
Grades 0-8
(Elementary)
34.4%
27.5%
3.8%
Tenure
<1 year
50.8%
Independence
Live with
parent or
working
spouse
63.0%
Percentage of Alberta’s workforce earning minimum wage
Potential implications of increasing the minimum wage
Demographics of minimum wage earners
Age
15-24
years
52.4%
“Ripple effect” wage
increases up the salary ladder
Increase in youth and
low-skilled unemployment
Increased instability in
the labour market
http://work.alberta.ca/documents/minimum-wages-comparison-after-taxes.pdf
http://work.alberta.ca/documents/alberta-minimim-wage-profile.pdf
http://calgaryherald.com/opinion/columnists/lammam-and-clemens-increasing-the-minimum-wage-wont-reduce-poverty
http://www.finance.alberta.ca/calc-script/tax_calc.html
Sources
*Estimated using Alberta Treasury Board and Finance’s Personal Income Tax Calculator
While our minimum wage
rate appears to be the
second lowest in
the country…
…our low-tax environment
means we actually have
the second highest.
1.5%