Minimum wage workers not the only ones getting screwed

I have a populist piece in The Tyee this morning on how last week’s paltry $0.20 minimum wage increase in British Columbia actually reflects stagnant wages across the economy and why the Fight for 15 is everyone’s fight. Here it is in full.

Last week, the B.C. government reacted to the increasing push for a higher minimum wage… by giving minimum wage workers a 20 cent raise. Even Business in Vancouver magazine quoted UBC labour economist David Green calling the new higher wage “laughably low.” What perhaps hasn’t received enough attention is that the two-dime bump in the minimum wage — the first in three years — is not that far out of line with stagnant wages across the economy. For instance, the average wage in British Columbia grew by 14 cents in 2014! While 20 cents over three years doesn’t even allow minimum wage earners to account for inflation, the fact is most of us have been barely keeping up with price increases. Real wages, those adjusted for inflation, have been mostly stagnant.

While Canada-wide statistics paint a picture of modest wage growth since the end of the last recession in June 2009, much of this growth is due to the three oil boom provinces, Alberta, Saskatchewan and Newfoundland and Labrador. In fact, for the more than 80 per cent of workers outside the oil boom provinces, average real wages have grown just two per cent since that period. Median wages, which are not dragged upwards by the disproportionately large increases in wages for the wealthy, have seen just 0.4 per cent growth outside the oil provinces. This is stagnation loud and clear (see this earlier post for a closer look at the numbers). (more…)

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Kshama Sawant talks socialism in Seattle and beyond

Last year, Kshama Sawant shocked the continent by winning a seat on Seattle’s City Council. She defeated an incumbent Democrat to become the first openly socialist city councillor in Seattle in a century. Sawant, an immigrant from India with a background as a software engineer and an economics professor, is a militant socialist activist who played a major role in the 2011 Occupy protests. Not your typical politician to say the least.

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Sawant’s surprise electoral win in Seattle has sparked discussion across North America. Last week, she made her first speaking appearance in Canada, addressing a fundraising event organized by the Coalition of Progressive Electors in Vancouver. I sat down with her before the event for a wide-ranging discussion touching on everything from her background in economics to the minimum wage compromise in Seattle and the role of transitional demands in fighting climate change to the history of sectarianism and building today’s left.

Side note: you can now subscribe to Political Eh-conomy Radio on iTunes. Follow this link.

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Five myths to bust about minimum wage hikes

I wrote a piece on the very recent proposal to increase the minimum wage in British Columbia that was published over the weekend in The Tyee:

The B.C. Federation of Labour has just proposed to increase the minimum wage in British Columbia to $13 per hour. In short, it’s about time. With this proposal, B.C. joins the minimum wage debate that has erupted across North America. The debate is much needed: poverty wages have no place in today’s economy.
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The mouse in the room: Small business fetish and the minimum wage debate

The scrappy mom-and-pop shop may be a nice image, but how well does it reflect the reality of employment? Small business may be neither as ubiquitous nor economically heroic as many people think. If this is the case, then perhaps the needs of small business should not figure as prominently in some economic policy debates. The minimum wage debate is a case in point. (more…)

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Economic history in the present: The wage fund and the minimum wage

How many bushels of wheat do you make a year? While this is not the most relevant question to be asking about wages today, some of the discussion around the minimum wage is taking inspiration from a very old economic idea according to which questions like this would be right at home. The idea is that of a “wage fund”: a fixed amount of total wages available to an economy for a given period that dictates the average wage. If such a fund exists, then any aim to raise wages within the period for which the fund is fixed will inevitably end up harming workers – most likely those with the lowest wages and the least power. Today’s arguments against increasing the minimum wage at times mirror this flawed logic – and for reasons that, oddly enough, reflect on why the theory was discarded in the first place. (Click here if you want to skip the history and get to the present; otherwise read on.)

wagefund2 (more…)

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The political aspects of the minimum wage

Discussion of the minimum wage can easily slide into a technocratic back-and-forth that ignores the vital political aspect at play. We can see this in much of the response to the report just released by the Ontario government’s Minimum Wage Advisory Panel (MWAP). Andrew Coyne, for example, once again argues that a basic income is a better solution to poverty than increases in the minimum wage. The question, however, should not be one of which single tool is best for fighting poverty, but how we can build the most effective toolkit, one that also puts political power into the hands of the poor. Poverty is multi-faceted and, while low-wage work is only one potential aspect of being poor, the minimum wage has effects beyond providing much-needed higher incomes. (more…)

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Legislating a real raise: Minimum wages and real earnings growth

In a recent post titled, “What happened to the distribution of real earnings during the recession?”, Stephen Gordon presents a graphs that shows some significant growth in real (adjust for inflation) earnings in Canada between 2007 and 2012. In addition, plotting average annual growth rates in real earnings against the distribution of earnings, the graph has a U shape. That is, the growth rates of real earnings are higher for those at or near the bottom and those at or near the top of the earnings distribution, with a “hollowed-out” middle.

Figure 1. Stephen Gordon’s graph showing a U-shape in real earnings growth 2007-2012 (black line). Source: Worthwhile Canadian Initiative.

This graph, as well as several others presented by Gordon in this post and a previous article that show some sustained general growth in real earnings, goes against the received wisdom that real earnings have been stagnant, in Canada and across the world, for the past 30 or 40 years – especially so for low earners. What is behind the discrepancy between this new data and the long-standing trend? Gordon claims it is lower-than-expected inflation and, if not the active, then at least the passive policy of the Conservative government. I take issue with these claims.

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