Minimum wage as a business strategy keeps workers in poverty

Plain Rhetoric
By Bill McQuarrie
January 9, 2018 - 5:00am Updated: January 9, 2018 - 7:04am
Image Credit: Mel Rothenburger

KAMLOOPS — With Ontario having increased the minimum wage to $14 and Alberta making similar changes, I thought it an appropriate time to write of what for some, is a belief in and acceptance of purposeful poverty. In this instance, I’m speaking of the use and acceptance of poverty as a tool for business success.

Up until now, we have normalized an economic system that uses minimum wage as a business success strategy. There seems to still be a corporate philosophy that endorses poverty in the name of shareholder equity and in so doing, institutionalizing subsistence living as a perfectly normal 21st Century way of life.

Once thought to be the domain of entry level jobs for young workers, minimum wage jobs are becoming the norm. In fact, according to a study in 2015 and contrary to what you may think, minimum wage workers are now more likely to be an adult female. And even more startling, these jobs are their permanent form of employment.

In 2002 and for the following eight years, the BC government accelerated the concept of legislated poverty by freezing the minimum wage at $8.00 an hour. Over that time, minimum wage earners in BC became the lowest paid in Canada, while inflation continued to erode the value of what little they were being paid. The impact on purchasing power was both dramatic and long lasting. In fact, by 2010, an employee working 40 hours a week had experienced a real annual loss of $3,000 in buying power.

If you’re already poor and wondering how you’re going to buy groceries, a $3,000 inflationary cut in pay is devastating.

With little choice, BC was eventually shamed into increasing the minimum wage and, despite the heavy opposition from the business community, the hourly rate was increased in 2010 and by 2012 was sitting at $10.25.

Six years later and BC’s minimum wage is $11.35, except for liquor servers who earn less at $10.10 hour.

Paying servers less suggests owners expect customers to take responsibility for and subsidize their serving employee’s pay cheque through tips. Gratuities, once meant to recognize good service are now considered part of the wage package provided by the employer. This is a wage top up without responsibility, as the employer does not have to make up the difference if it’s a bad tip day.

Back in 2010 when minimum wages were unfrozen, many employers predicted massive layoffs combine with equally startling increases in prices. Neither proved to be true and if my conversations with owners this past summer are any indication, it is actually the opposite and has become increasingly difficult to find people willing to work in minimum wage jobs.

Over the past summer, I heard stories of reduced business operating hours, employees not showing up for work, potential hires turning down job offers and, of course, high turnover rates. The employers seemed like decent sorts and spoke of how they try to create a positive workplace experience for their staff.

They would often list the benefits they felt made working for them a good experience. However and while there are exceptions, in most instances I didn’t hear how their minimum wage policy made them stand out as an employer. I was listening to smart entrepreneurs with the guts and fortitude to actually start a business, seemingly admit through omission that the viability of their business dreams required employees willing to endure a life of poverty.

Personally, I would not start a business today if the margins weren’t there to pay a living wage. I would find it impossible to sleep at night knowing my staff are having difficulty buying groceries or paying the rent because I don’t pay them a living wage.

Many a store has a fair trade policy for their inventory that supports the rights of farmers and factory workers in Third World countries. They have stickers on their products, at the counter and in their advertising that proudly proclaim their beliefs in humanity and fair trade. But I’ve never seen a ‘fair wages to staff’ sticker on those doors and maybe the time has come.

We as consumers have a role to play as well, so I ask; if you saw a business with a Fair Wage sticker on their door, would you buy from them? Or is institutionalized poverty a perfectly acceptable business strategy?