Not everyone is satisfied with New Brunswick’s recent announcement to increase its minimum wage by $2.
“The minimum is still below a living wage, and we’d like to see it rise to that,” said Abram Lutes, provincial coordinator for the Common Front for Social Justice, a group that brings together voices from the labor movement and community groups.
Lutes said the minimum wage increase, which will be raised to $12.75 in April and $13.75 in October, is a positive development.
Many organizations like theirs want a minimum wage of $15 per hour, with annual increases to get closer to a livable wage. He said gradual increases will give businesses time to prepare and adapt.
“There’s always some growing pains for business when the price of labor at the minimum wage is raised but most firms tend to do okay,” said Lutes.
He said the majority of companies that pay a minimum wage are large corporations that can afford the increase.
“For smaller businesses, we know that there are nonprofits who, because their funding is dependent on external factors, have trouble meeting wage increases. We think that there can be some support in place for those kinds of entities in the transit,” said Lutes.
When determining what the livable wage is, Common Front uses numbers given by the Human Development Council, which they think is a better measure than the numbers the province uses from the Consumer Price Index (CPI).
According to the 2021 report from HDC, the livable wage in Fredericton is $21.20, Saint John is $19.75, Moncton is $18.75, and Bathurst is $17.50.
Randy Hatfield, executive director for Saint John Human Development Council, said livable wage numbers are an important reference point. The living wage is calculated with a family of four in mind, two working adults and two children ages 2 and 7.
It is a conservative estimate that accounts for ten expense categories like food, transportation and shelter. It also tracks the largest expenses in each city.
“It’s a data point for employers, for employees, for government. It’s important to know what it costs for a reference family to live in a community with dignity and some choices,” said Hatfield.
Hatfield said that, in many cases, anyone who is unionized usually has a wage rate that meets or is above the living wage.
“The question then is what happens to those that aren’t represented by a union? Who negotiates or speaks for them?” he asked.
Hatfield said that minimum wages were not made with people’s needs in mind. A New Brunswick minimum wage report from May 2021 showed that 15,500 people in the province were earning minimum wage, making up 5 percent of the labor force.
He said that when the government last decided to index the rates to inflation, it baked in a rate that was inadequate.
“This is a real increase in the rates, so that’s to be welcomed,” said Hatfield. “Is there more to be done? Absolutely.”
Lars Osburg, the McCulloch professor of economics at Dalhousie University, said that he was surprised by New Brunswick’s decision to increase the minimum wage after a history of some of the lowest wages in Atlantic Canada.
He said the government could be recognizing the realities of the post-Covid-19 economy, which have disproportionally affected certain sectors like tourism.
“As we come out of the pandemic…there is a reluctance of some people to go back to really poorly paid jobs,” said Osburg.
Despite a fear that a minimum wage increase would cause unemployment, he said studies by Nobel Laureate David Card suggested instead a slight increase in employment. While increasing the minimum wage doesn’t eliminate poverty, but it will have a positive impact on low-income workers.
“One thing that a higher minimum wage does is that it takes wages out of the competitive portfolio of management, they can’t compete anymore on just paying their workers less,” said Osburg.
Instead, they have to compete for more productivity. He said a higher minimum wage will push the economy towards high productivity.
“Some firms have what you call a high wage strategy, where they pay reasonable wages and put a lot of effort into increasing the productivity of the labor force,” said Osburg.
When there is a high demand for new hires, he said that the wage should go up.
“Low products firms, firms can’t figure out how to pay their workers a higher wage, they go out of business, and other people who can figure out how to pay their workers a reasonable wage and still make money — they stay in business.”
Rachel Smith is an intern with Huddle, an Acadia Broadcasting content partner.
