By Janine Carmichael, Canadian Federation of Independent Business
On April 1, 2010, Alberta’s minimum wage will remain at $8.80/hour.
Several years ago, the Alberta government announced that minimum wage would increase automatically every April 1 by the same percentage as the year over year increase in average weekly earnings in the province. However, this year the government decided to freeze minimum wage at $8.80 and have an all-party committee review the process used to increase minimum wage in the future.
It was a good move and the government deserves some kudos.
Putting more income in the hands of lower income Albertans is important and it’s a goal shared by the business community. However, raising the minimum wage is not the only way to achieve that goal. While most employers pay above minimum wage already, the extra cost can force some to make the tough choice of reducing hours, or passing up the opportunity to hire more staff. In that case, minimum wage hikes can actually hurt those it’s supposed to help.
That’s why freezing minimum wage in 2010 was a good move, particularly heading into this year’s summer student hiring season.
Hopefully this all-party committee review will include consultation with employers. If so, MLAs will hear about a range of options to help lower income Albertans.
For example, in British Columbia and Nova Scotia they have a slightly lower minimum wage for those who are brand new to the workforce. The idea of this “training wage” is to recognize the significant investment employers make in training new workers.
In Ontario, there is a slightly lower minimum wage for those under the age of 18 and for those who serve liquor. In Quebec, there is a separate wage for those who earn tips as a large proportion of their income.
Another option would be to further increase the basic personal exemption. In 2010, all Albertans can earn $16,825 before paying provincial income tax. Someone working full-time earning minimum wage would earn $18,304. Why not raise the basic personal exemption so that no Albertan earning minimum wage pays any provincial income tax at all? It would be an expensive change, but one that would be shared by all taxpayers. And that certainly sounds like a better approach than simply hiking the minimum wage and asking employers to pick up the tab and potentially hurting some lower income Albertans.
Janine Carmichael is the senior policy analyst for western Canada with the Canadian Federation of Independent Business. She can be reached at janine.carmichael@cfib.ca.