Fifteen-dollar minimum wage is not the answer

Why economics are complicated and suck

By Cazzy Lewchuk, Interim Opinions Editor

The minimum wage in BC will soon be $10.85 an hour, one of the lowest in Canada. But it’s much better than the United States—wages vary depending on the state, but some have it as low as $7.25 an hour.

Recently, an idea has begun to take form that is supported by the majority of Canadians and Americans: a federal $15 minimum wage, so that people can work full-time and not live in poverty. Until recently, I supported this idea myself, as Vancouver is one of the most expensive cities in North America, and $15 an hour is a lot more money than I earn.

The low minimum wage is not the only blame for citizens living in poverty. School costs are at an all-time high, particularly with the rise in demand for post-secondary education. In many countries, university is free—citizens get an education without going into debt, and the resulting degree helps provide for a better-paying job. The minimum wage is not the equivalent of $15 CAD in most countries, yet many face a smaller rate of poverty than North America.

Increasing funding to public education in Canada and the US (or indeed, subsidizing it 100 per cent) would not only provide for more citizens, but lead to an increase in industry and economy with the improved skill of the workforce.

A $15 minimum wage would also result in reduction of hours and a rise in unemployment. With a wage like that, each worker has to provide $15 worth of revenue to the company, and, particularly with small businesses, that just isn’t happening. Mass automation would result, being the much cheaper option. Why pay a fast-food cashier to take your order when you can install a machine that does it for cheaper? A sudden rise in wages would also lead to a massive increase in prices. This has already started to take place in cities like Seattle that have adapted the $15 wage. After six months to a year, the $15 begins to feel like $10 because everything costs $5 more than before.

Breaking the poverty cycle and providing a better quality of life for our citizens involves social and systemic change. It’s not just education that has costs at an all-time high. We all know the Vancouver housing market is outrageous, whether buying or renting. Essentials like food and gas cost more than ever. Even health care costs in Canada can leave a person in serious debt, despite our socialized health care system. (This is, of course, a much bigger issue south of the border, where medical bills can leave a person hundreds of thousands of dollars in debt.)

Some areas of the world explore a “basic income” system, in which citizens are paid a subsidy to cover basic living expenses, leaving them free to pursue a better-paying career without the burden of serious debt. Ontario is experimenting with this system starting this fall—perhaps Canada will adopt it sooner than we think.

A higher minimum wage (temporarily) removes the cause, not the symptoms. If we want a better future for our citizens—and we do—social programs are the answer, not jacking up wages and prices.