Minimum Wage Increases

I think that increasing minimum wage in Alberta hurts the economy. I'm sure some people are going to work at setting me straight, so I'm looking forward to the education. The reason I dislike minimum wage increases is that there is no value in increasing it, as I am working on a concept called relative wage.

You absolute wage is how much you make. For instance, if you make $12/hr, you make $12/hr. Your relative wage is how much you make compared to minimum wage. Currently in Alberta, if you make $12/hr, you make $2.25 more than minimum wage ($9.75). Therefore, I will refer to your relative wage as $2.25/hr. I may later change my definition of relative wage to mean a ratio of minimum wage, but the difference will suffice for the point I'm trying to make.

When I first put both feet in the workforce, minimum wage was $5.90/hr. I remember starting at the River Roadhouse as a doorman at $7.00/hr. That was decent for me at 18 years old for what I was doing. I was listening to awesome live music, drinking free pop, eating discounted food, helping out the waitresses a bit, and dealing with the occasional drunk guy making a bad decision. Cool. Nowadays the absolute wage of $7.00/hr doesn't sound very good at all, but my relative wage was $1.10/hr. For the job I was doing, I found that to be just fine.

Now, back when the minimum wage was $5.90/hr, a $12.00/hr job was actually a relative wage of $6.10. Not bad, right? Now here's where my problem with minimum wage increases: $12.00/hr jobs are still $12.00/hr jobs in absolute terms, especially in tertiary industries. All we manage to do when we increase minimum wage is decrease the relative wage of everyone not on minimum wage. That job which paid a relative wage of $6.10/hr when I first started in the workforce is currently paying $2.25/hr.

Now, we can't blame greedy employers for this problem. At first, I wanted to. I have learned a lot about business over the past few years, and you simply can't blame owners. A line cook making $12/hr is going to keep making $12/hr so long as you're not willing to pay more than $10 for a burger and fries. I know several restaurateurs, and I can't think of a single one of them that would be opposed to paying their line cooks $25/hr, but nobody wants to pay $37 for a caesar salad, so it just isn't possible.

Now what about the people making minimum wage? How can they earn a comfortable living? They can make a comfortable living by bettering themselves. By learning, climbing the corporate ladder, working hard. Increasing minimum wage does them no favours because their relative wage stays exactly the same.

The problem employers face when minimum wage is increased is that it hurts the bottom line. Especially in the bar and restaurant industry, you can't increase your prices. Nobody wants to pay $5 for a beer, and nobody wants to pay $20 for a burger. You can't offset that cost. The entire industry is hurting right now. The bar I started working at when I was 18 used to be a huge party every weekend. 160-180 people at any given time after about 10:00 on Friday and Saturday. Now it's closed. While I'm sure it's not the only reason, I know the effect minimum wage has on the bottom line is a factor.

Write your MLA's. Ask for a freeze on minimum wage. It's the only way to protect your own relative wage.