Minimum Wage Proposal $10.00 hour

Jerry J. Fortin · November 5, 2006

My guess is that you are female. Either single or wanting to be single, strong willed, upwardly mobile and uncomprimising in your beliefs. You also appear to be inteligent and hard working. Not that I think that you would care but, three cheers for you, girl or not. Nations need hard working ambitious people, and you seem to fit that bill.

Are you talking to me?

That last bit reminds me of a funny poster I saw years ago. "Go to work every day. Millions on welfare depend on you."

Yep, I was talking to you. Actually it was a compliment, I am a wage slave and happen to admire those with the guts to go their own way and become self employed.

crazymf · November 5, 2006

Well thanks then. Getting a compliment here? That was definitely a virginal experience. :lol:

Actually I'm a 46 year old white man. Wife and myself run a small business which operates 24/7 and we have 7 full time employees. Employees are the absolute hardest part of running a business. With the boom in Alberta, employees are also hard to find or replace so we are constantly trying to think of ideas on how to make them happier so they'll stay. Our business is near an industrial park where the drilling companies pay $17-$22/hour for someone to sweep the shops. That's a hard act to follow.

Jerry J. Fortin · November 5, 2006

Well thanks then. Getting a compliment here? That was definitely a virginal experience.
Actually I'm a 46 year old white man. Wife and myself run a small business which operates 24/7 and we have 7 full time employees. Employees are the absolute hardest part of running a business. With the boom in Alberta, employees are also hard to find or replace so we are constantly trying to think of ideas on how to make them happier so they'll stay. Our business is near an industrial park where the drilling companies pay $17-$22/hour for someone to sweep the shops. That's a hard act to follow.

My guess was wrong then! Be different, use an amployee of the month award and give them a vacation on the house, to be taken during the annual vacation of course. You could have an employee of the day award and buy them lunch. Make yourself known as a great boss to work for. Use the tax deductible status you have and utilize it to provide benefit to the employee.

crazymf · November 5, 2006

Yeah, we do stuff like that. I went to an employment standards seminar a few years ago and they kept stressing to us that a happy employee is a productive employee. The problem with younger people as far as employment goes is that they always need to balance their work time with their social time. If the balance gets out of whack, so do they and you're liable to lose them. Younger people are also constantly evolving personally so they may grow out of your employment and go looking for a change.

theloniusfleabag · November 6, 2006

Dear August1991,

I wouldn't be surprised to learn that it costs an employer on average $10 an hour to pay an employee $8 an hour because of payroll taxes and forms.

It isn't the time that is the issue, (it takes about 10 min to do payroll for 3 employees) because there is a TOD ([tax] tables on diskette) program that calculates all deductions for you. You just punch in gross salary numbers and copy the deductions calculations. However, as crazymf points out,

Don't forget that we as employers match the CPP deduction and pay 1.4 times the EI deduction in Alberta.

Further, you should see the paper that RevCan pushes.

So, yes, more than $8/hr is paid by the employer at the end of the day. Mind you, with larger companies, costs would increase, and some of them simply 'job it out'.

Minimum wage should not be raised, but I don't think it should be abolished, either. I don't want to see shantytowns near a textile plant and a landfill (grocery store) in Canada anytime soon.

Charles Anthony · November 6, 2006

Minimum wage should not be raised, but I don't think it should be abolished, either. I don't want to see shantytowns near a textile plant and a landfill (grocery store) in Canada anytime soon.

That connection between minimum wage and poverty is unfounded.

MightyAC · November 7, 2006

There must be a reason for setting a minimum wage, yet the wage itself seems to be arbitrary. Maybe it shouldn't be. Maybe there should be some kind of formula to determine the appropriate minimum wage in each province.

Here's one example. In Canada we don't have an official poverty line like they do in the US. There are two indicators of, so called, poverty that seem to be quoted. Maybe Canada should set an actual official poverty line for each province then base minimum wage on that number. So if the poverty line for Manitoba was set at $15,000 for 1 individual then based on a 2000 hour work year minimum wage should be $7.50 per hour. Every 4 years the poverty line and minimum wage could then be recalculated.

bradco · November 11, 2006

Minimum wage should not be raised, but I don't think it should be abolished, either. I don't want to see shantytowns near a textile plant and a landfill (grocery store) in Canada anytime soon.
That connection between minimum wage and poverty is unfounded.

I agree but there still needs to be some level of a minimum wage. One reason is that we need to protect workers from being exploited by companies (I think its possible some workers wont know their true market value). Another reason is there should be a minimum wage to ensure that people dont just decide to quit working and move to ei.

geoffrey · November 11, 2006

bradco,

You can never protect someone from their own stupidity, there will always been exploited workers.

bradco · November 11, 2006

bradco,
You can never protect someone from their own stupidity, there will always been exploited workers.

Ya but we can try a little, no? Theres nothing wrong with setting a minimum wage that isnt too high so that it will produce too much unemplyment. People do need a certain amount of money to live.

either way thats the weaker argument. I still believe... "Another reason is there should be a minimum wage to ensure that people dont just decide to quit working and move to ei."

margrace · November 11, 2006

Well lets look at another situation, Firestone Tires in Collingwood. Their workers are on strike, why, because the new contract with the company lowers their wages from over $18.00 an hour to $12 and hour. They are also taking away benefits. Could you live on that?

sideshow · November 11, 2006

Imagine if the government passed a law making it illegal to buy or sell a car for less than $40,000. What would happen? Well, people who drive BMWs would be unaffected. But the law would seriously affect people who drive Hyundais.
It has never failed to amaze me how people who profess to want to help poor people can advocate policies that achieve the exact opposite.

The best way to help people working on low wages would be to cut all payroll deductions (CPP, EI and so on). It is a crime that the government takes any money from a person earning minimum wage.

Stupid idea. It's one of those simplistic, feel-good things the Left is so noted for, which shows the proponent has no time for complexities.
Not only is the idea stupid but given the current labour market, this proposal is vaguely ridiculous. Unemployment is the lowest it has been in 30 years and in all likelihood it will just fall further.
BTW, federal minimum wage regulations affect a very small number of people in Canada.

Interesting concept. Reduce employers costs by not having them do the paperwork for lower paid workers, and raise the income of the employees by them not having to pay into these programs. Setting a threashold (whatever that may be) as a starting point for collecting? hmmmmm.

and the costs saved by employers could also be equally split between profits, and perhaps even untaxable benefits such as dental, drug plans, etc. could be a win win situation for everyone.

Renegade · November 11, 2006

I agree but there still needs to be some level of a minimum wage. One reason is that we need to protect workers from being exploited by companies (I think its possible some workers wont know their true market value). Another reason is there should be a minimum wage to ensure that people dont just decide to quit working and move to ei.

What is a worker's market value? Isn't it exactly what he willing agrees to work for and what someone else willingly agrees to pay him?

Given you want to "protect" workers, would you also want to "protect" companies who overpay workers by setting a maximium wage?

Renegade · November 11, 2006

Well lets look at another situation, Firestone Tires in Collingwood. Their workers are on strike, why, because the new contract with the company lowers their wages from over $18.00 an hour to $12 and hour. They are also taking away benefits. Could you live on that?

So, shouldn't they be out looking for another job which does pay them what they think they are worth? If they don't find one, isn't that a clue that their worth has diminished over time?

bradco · November 11, 2006

I agree but there still needs to be some level of a minimum wage. One reason is that we need to protect workers from being exploited by companies (I think its possible some workers wont know their true market value). Another reason is there should be a minimum wage to ensure that people dont just decide to quit working and move to ei.

What is a worker's market value? Isn't it exactly what he willing agrees to work for and what someone else willingly agrees to pay him?

Given you want to "protect" workers, would you also want to "protect" companies who overpay workers by setting a maximium wage?

Im just saying that issues of incomplete information may lead to a "market value" that is under, or yes possibly over, what supply and demand ought to determine. Also, athough I support market systems, Im not foolish enough to believe that unchecked market systems provide the best result. A little bit of tinkering is good for society. It is not good to have people moving to ei or crime because they cant make a living wage.

There is little need for a maximum wage because companies wont operate with labour costs that are too high as to obstruct them from at least maintaining the break even point. They wont go on ei when faced with a situation where they cant make enough money.

Renegade · November 11, 2006

Im just saying that issues of incomplete information may lead to a "market value" that is under, or yes possibly over, what supply and demand ought to determine. Also, athough I support market systems, Im not foolish enough to believe that unchecked market systems provide the best result. A little bit of tinkering is good for society.

The problem is incomplete information. The way to solve it is by providing more complete information. For example if a maid is aware that the going rate for housework is $12/hour, she is unlikely to work for $8/hour. It is easy, efficient, and cost effective to publish average wage rates.

It is not good to have people moving to ei or crime because they cant make a living wage.

Agreed. However since EI only pays a percentage of what the worker earns, it already is a financial disincentive in most cases. As well, the EI system does not pay out on voluntary moves to EI. You can generally always make more on crime than by working. The trick is to create a disincentive by increasing the risk associated with crime.

There is little need for a maximum wage because companies wont operate with labour costs that are too high as to obstruct them from at least maintaining the break even point. They wont go on ei when faced with a situation where they cant make enough money.

Not so. In many situations the companies won't lose money because they can pass on the additional costs to the consumer. As one example take monopolies like utiliites. If they overpay they simply pass on the cost in terms of higher rates. The public sector is in a similar situation. No doubt it may be that CEOs and executives are overpaid as well. Unfortunately it is harder with executives to guage what constitutes being overpaid.

scribblet · November 11, 2006

Well lets look at another situation, Firestone Tires in Collingwood. Their workers are on strike, why, because the new contract with the company lowers their wages from over $18.00 an hour to $12 and hour. They are also taking away benefits. Could you live on that?

So, shouldn't they be out looking for another job which does pay them what they think they are worth? If they don't find one, isn't that a clue that their worth has diminished over time?

Partly, but I think Firestone is losing money, its either pay less or go out of business alltogether. Not sure about it but I think they allready laid off a lot of workers.

I remember years ago at the Toronto Telegram, the union didn't want to believe that the Telegram couldn't meet union demands and would go under if the union didn't agree to some changes. The union didn't - the Telegram closed.

bradco · November 11, 2006

"Not so. In many situations the companies won't lose money because they can pass on the additional costs to the consumer"

This works to the point that they have to charge more than consumers are willing to pay. If they can pass on the increased labour costs without effecting consumer demand than the labour costs aren't too high. If consumers will willingly pay the increased price than I would argue that labour is not really being overpaid. As soon as demand falls from increased prices than the company would either cut labour costs or go under.

Obviously this doesn't work under monopoly situations. Thats why regulation of such industries is needed. If you cap the price of the goods (ie power) at a fair competive market price than companies will only pay out the labour costs that they can afford.

"The way to solve it is by providing more complete information"

Isnt it just easier to set a reasonable minimum wage? There are too many problems with trying to get complete information to every person. Plus I still think a reasonable minimum wage is acceptable interference in the market by the government. It promotes a good social objective and makes society better in the aggregate.

"The trick is to create a disincentive by increasing the risk associated with crime"

Very difficult and expensive solution when you can just set a "living wage"

Topaz · November 12, 2006

Anyone making $10 hr x 40hrs= 400.00 take deductions and what do you have? Basic expenses would be rent anywhere from $400-800 monthly, gas, hydro, gas for car, insurance for car, maybe car payments, food, and if you have a mortgage, theres more expenses with a house. It definitely take 2 people, to make ends meet, on wages lower than $20 hrly. A single person depending on their debt would find it hard to survive, so how can a family of 2 kids make it? It doesn't sound like Harper's Cons are into social programs , which the low and low-middle class need to make it.

August1991 · November 12, 2006

"The way to solve it is by providing more complete information"
Isnt it just easier to set a reasonable minimum wage? There are too many problems with trying to get complete information to every person. Plus I still think a reasonable minimum wage is acceptable interference in the market by the government. It promotes a good social objective and makes society better in the aggregate.

Bradco, we could use your argument for many other situations. I'm sure many people don't understand Internet pricing. Maybe the government should set minimum standards there. Or how about gasoline prices? That's a confusing sector where exploitation probably exists. And why stop at minimum wages? Why not set minimum fees for lawyers and dentists?

Bradco, you are assuming that a government bureaucrat knows the situation better than someone working for minimum wage. That's unlikely.

Renegade · November 12, 2006

This works to the point that they have to charge more than consumers are willing to pay. If they can pass on the increased labour costs without effecting consumer demand than the labour costs aren't too high. If consumers will willingly pay the increased price than I would argue that labour is not really being overpaid.

Consumer demand is not binary. It is a curve. Any increase in cost will be reflected in prices and will affect demand. Just because consumers are willing to pay the price, does not indicate that labour is not being overpaid. We still haven't established how you guage what is overpaid. Many CEOs are paid 10s of millions yearly. This, despite the fact that company performance is poor. The fact that consumers are still willing to buy the company's products is not an indication that the CEO is not being overpaid.

As soon as demand falls from increased prices than the company would either cut labour costs or go under.
Obviously this doesn't work under monopoly situations. Thats why regulation of such industries is needed. If you cap the price of the goods (ie power) at a fair competive market price than companies will only pay out the labour costs that they can afford.

In many cases that is not how monopolies work. The regulating bodies set the prices based upon the profit the company makes. Prices are set at cost plus a reasonable profit. Costs include the cost of labour, regardless of the fact that the labour is overpaid.

Isnt it just easier to set a reasonable minimum wage? There are too many problems with trying to get complete information to every person. Plus I still think a reasonable minimum wage is acceptable interference in the market by the government. It promotes a good social objective and makes society better in the aggregate.

It may or may not be easier. Certainly it is more disruptive, and it doesn't necessarily address the problem which you bring up. The only time it address the problem is if a worker is being paid under minimium wage and the real value (however we determine that) is exactly minimium wage. It doesn't address the situation where the value of the work is really under minimium wage and that is exactly what the worker is being paid. It doesn't address the situation where the worker is being paid something over minimium wage, however the real value is higher. In short it is a poor tool for addressing the problem you describe.

Very difficult and expensive solution when you can just set a "living wage"

Not at all. Setting a minimium wage does not prevent or preclude crime. Crime is a result of many different factors. It is likely that a society has to invest in crime prevention and retribution regardless of what the minimium wage is. The minimium wage is parts of North America is higher than much of Asia, yet in many cases the crime rate in parts of Asia is lower. As I said, crime is not just a result of one factor, so investment to discourage crime needs to take place anyway.

Renegade · November 12, 2006

Well lets look at another situation, Firestone Tires in Collingwood. Their workers are on strike, why, because the new contract with the company lowers their wages from over $18.00 an hour to $12 and hour. They are also taking away benefits. Could you live on that?

So, shouldn't they be out looking for another job which does pay them what they think they are worth? If they don't find one, isn't that a clue that their worth has diminished over time?

Partly, but I think Firestone is losing money, its either pay less or go out of business alltogether. Not sure about it but I think they allready laid off a lot of workers.

I remember years ago at the Toronto Telegram, the union didn't want to believe that the Telegram couldn't meet union demands and would go under if the union didn't agree to some changes. The union didn't - the Telegram closed.

There are many unions which tried to play chicken with a company regarding wage rates, to the detriment to both the company, the union and their members.

bradco · November 12, 2006

"Consumer demand is not binary. It is a curve. Any increase in cost will be reflected in prices and will affect demand."

True thats the theory but in practise a 10 cent increase in something worth $100 is not going to stop someone from purchasing it. Certain increases in prices can be passed on to consumers without effecting demand. It would also depend on the elasticity of the product in question as well.

"We still haven't established how you guage what is overpaid."

I know. I dont think there really is a good way to guage what is overpaid. Each person is going to have a different opinion of what amount of production from a person is sufficient for their pay. The guage I am using is whether or not the company is willing to pay or not. If the company is willing to pay a certain wage then they are of the opinion, for the most part,that they are not overpaying their employee.

"In many cases that is not how monopolies work. The regulating bodies set the prices based upon the profit the company makes. Prices are set at cost plus a reasonable profit. Costs include the cost of labour, regardless of the fact that the labour is overpaid. "

Still stands that the company cant overpay to the point they are losing money, unless there is a government subsidy and then that is a political not an economic decision. If the company cant find a worker to work for less than they are not overpaying. If there are agreements in place that dont allow the company complete flexibility to find cheaper labour that is because they have decided the stability of the current labour warrants an increase in labour costs.

-I just dont see anything bad with having an $8hr minimum wage

ClearWest · November 13, 2006

-I just dont see anything bad with having an $8hr minimum wage

I do -- Everyone whose labour is worth less than $8/hr is left behind without a job.

Let's say you make $10/hr right now. Tomorrow, the socialists decide to be 'generous' and make the minimum wage $15/hr. Your boss legally has to be paying you $15 an hour-- If your boss can't afford that, or if he/she doesn't think you're worth that, you'll be out of a job. Whereas without a minimum wage, you would still be working for $10/hr. The almighty gov't may think that's too low -- but if it's what you agreed to, then you wouldn't appreciate them taking it away from you and leaving you with nothing.

I believe in free markets. The gov't should let people trade their labour for whatever they think it is worth, and their money likewise.

geoffrey · November 13, 2006

Exactly. We do have to admit though, having a 'minimum wage' exists no matter what. It's set by our welfare system. Eventually the pay gets so low it's best to just be on welfare.