NDP proposes Federal Minimum Wage - $10.00

[ClearWest]

OTTAWA – The NDP announced today that it has tabled a motion in the House of Commons to reinstate the federal minimum wage. The motion also calls on the federal government to implement a national anti-poverty strategy. The NDP motion sets the federal minimum wage at $10 per hour.

“In a country as wealthy as ours, it’s not right that so many working and middle class families are working harder and harder just to make ends meet,” said NDP Leader Jack Layton.

Today one in six Canadians live in poverty and nearly 1.2 million of these are children. Many adults living in poverty work for rock-bottom wages. One quarter of poor families now have someone working full time and two million families are unable to find shelter they can afford. The federal minimum wage was abolished by the Liberal government in 1996.

See full article here.

First of all, I'm skeptical of their statistic: One in six Canadians live in poverty? What on earth do they think poverty is? Poverty is when you don't have basic necessities like food/water/shelter/clothing. People living on less than a dollar a day.Here is a chart found on Wikipedia's page for poverty, and Canada isn't even on the chart, let alone batting at some 17% (1/6) that the NDP claim.

The minimum wage is economically dangerous. People who want to trade their labour, but are worth less than $10 on the market, will be out of work - simple as that.

Personally I'm disturbed by the recent socialist ignorance and/or deviousness that is going on in this country. After they put a lot of people out of work, they'll claim that we need more money for the unemployed, or more housing. This is another scheme to draw us more and more into government dependency. Let's stop asking the government to do things for us before it's too late.

The good news is that it probably won't pass. They're going to vote on it later this week. Thank heaven we don't have an NDP majority - I would leave the country and/or devote my life to anti-statism.

Let me know what you think.

[geoffrey]

The good news is that it probably won't pass. They're going to vote on it later this week.

You never know, Dion might declare himself the God of all Gods and whip the vote against all advice, like the terrorism bill? Get the Quebecois unionists onboard and you've got a wholesale sellout of Canada's economy.

Thank heaven we don't have an NDP majority - I would leave the country and/or devote my life to anti-statism.

I may do that with any of the governments how leftist they all end up ruling.

[Riverwind]

Today one in six Canadians live in poverty

The poverty statistic used by groups like the NDP is the relative LICO (Low Income Cuttoff Line) which is defined to be: "The income levels at which families or unattached individuals spend 20% more than average on food, shelter and clothing."

This is a bogus stat since it measures relative poverty - not real poverty. Here is a paper that explains the flaws in the measurement: http://www.fraserinstitute.ca/admin/books/...-Nov03sarlo.pdf

Extending this analysis a bit further, had the original LICO values been simply updated using the consumer price index, the estimate of the incidence of low income (what many in the social welfare community call “poverty”) for Canada in 2000 would be about 10 percent, compared with current LICO estimates in the range of 16 to 18 percent, and compared with the recent basic needs poverty estimates of about 8 percent. This differential gives us yet another (and perhaps more a dramatic) indication of the impact of the “relativity” of LICO.

[geoffrey]

The best way to give them more disposable income is to cut their taxes.

Raising minimum wage (in places where people actually make minimum wage) causes all sorts of distortions in the labour market and forces people out of jobs. Cutting their taxes gives them more cash.

Remember, increasing the minimum wage increases the government's take of cash.

A flat tax is another great idea for those on the lower income spectrum. Many cases exist were someone near a tax bracket level earns less per hour by working longer. What encouragement does that give to a worker? Your going to pay me less per hour to work longer? Ha!

There should be no disincentive to taking on multiple jobs or working overtime or moving to FT from PT.

[Saturn]

The lowest wage the federal gov't pays is something like $9.90, so who cares? It's not a real change - the NDP just want to brag about doing something about poverty and the Liberals and Conservatives will oppose it just for ideological reasons. A lot of noise about nothing.

Poverty levels in Canada are not that bad compared to other developed countries but are quite high for children. That 1 in 6 is the poverty rate for children, not overall rate for all Canadians.

The 2005 LICO for a family of 4 living in a city of over 500K is $32,556, for rural - $21,296.

http://www.statcan.ca/english/research/75F...2MIE2006004.pdf

Do you think that's enough for a family of 4?

[geoffrey]

Poverty levels in Canada are not that bad compared to other developed countries but are quite high for children. That 1 in 6 is the poverty rate for children, not overall rate for all Canadians. Of course, the NDP are exaggerating.

How much of that poverty is on reservations or perhaps even off-reservation status Indians?

I don't expect you to pull a stat out of your hat, but I think some of the issues with poverty in Canada are more social than economic.

[Saturn]

How much of that poverty is on reservations or perhaps even off-reservation status Indians?

A lot. Child poverty on reservations, among new immigrants and among single-parent families is 40% to 50%.

I don't expect you to pull a stat out of your hat, but I think some of the issues with poverty in Canada are more social than economic.

That's always the case - everywhere.

[Saturn]

The best way to give them more disposable income is to cut their taxes.

A flat tax is another great idea for those on the lower income spectrum.

It is a great idea to triple their taxes.

Many cases exist were someone near a tax bracket level earns less per hour by working longer. What encouragement does that give to a worker? Your going to pay me less per hour to work longer? Ha!

Do tell us about those cases. I'm not aware of any but you're the tax expert.

There should be no disincentive to taking on multiple jobs or working overtime or moving to FT from PT.

I thought we were supposed to give them more money to stay home and procreate?

[geoffrey]

It is a great idea to triple their taxes.

Eh? There are ways of implementing the flat tax that prevent that.

Do tell us about those cases. I'm not aware of any but you're the tax expert.

Speaking only on Federal taxes (you can apply provincial brackets as well if this is the case in the province of choice)....

Take the example of a subject working 22 hours a week at $25 an hour. After taxes, his effective income is $21 an hour. Moving to a 25 hour work week then pays him $20 an hour because of a higher effective rate on those additional 3 hours of work.

The differences are larger when you compound provincial rates, which are generally more 'progressive' with the exception of Alberta's Flat tax.

There is a great peice of work by Minister Bernier published by the Montreal Economic Institution on the topic of the fairness of flat taxation, from which I drew my example. It can be found here:

http://www.iedm.org/uploaded/pdf/nov04_en.pdf

His tax math works and his arugment is very compelling towards the productivity (and therefore individual wealth) gains we'd see with a flat tax. People would be encouraged to generate more wealth for themselves if they didn't fear higher tax burdens.

The tax still is progressive in the since that the rich do pay signficantly more than the poor. I find it hard to justify why the rich must pay a higher percentage of their money than the poor, we should all contibute a similiar amount into the system.

I'm also fervantly against all direct transfers of wealth, which were I'd see much of the savings in spending needed before a flat tax could be reasonably implemented.

Read here on the Hall-Rabushka flat tax: http://oldfraser.lexi.net/publications/cri...section_06.html

Now I don't want to go into too much detail here fearing thread drift, let's keep it to how these taxes encourage people to work more and how that deals with poverty. I'm working on putting together my thoughts on an overall tax reform for another thread (maybe by tonight), based on the Hall-Rabushka system... we can discuss tax system specifics there.

I thought we were supposed to give them more money to stay home and procreate?

No, I'm not in favour of the $100 cheque, Income Splitting or Universal Childcare. So not me. I've supported Riverwind's position on Income Splitting as being reasonable, but I think it's far from the most efficient or reasonable tax cut.

[Saturn]

Eh? There are ways of implementing the flat tax that prevent that.

Do they involve going from 0% tax on the first X dollars to 25% tax on the X+1st dollar? What's the value of X that will fit your example?

Do tell us about those cases. I'm not aware of any but you're the tax expert.

Speaking only on Federal taxes (you can apply provincial brackets as well if this is the case in the province of choice)....

That's pretty obvious. Sorry, I misread your earlier post.

Actually, I'm not at all convinced that flat taxes will increase productivity. I can see that some people will be compelled to work longer (increasing the length of the workday and possibly reducing the number of workers) but it isn't clear to me that that will increase productivity (since a worker's productivity goes down as the day progresses and chances for making mistakes increase). Also working longer causes more stress and burnout - do we throw those workers out when they crash? I can't say much without seeing some data but I can't argue that a flat tax will increase productivity more than I can argue that it will decrease productivity. I certainly know why Bernier would passionately support a flat tax though.

[geoffrey]

Do they involve going from 0% tax on the first X dollars to 25% tax on the X+1st dollar? What's the value of X that will fit your example?

See my thread on tax reform, I just posted it. It would be significantly higher than current deduction, and higher for families (reflecting the cost of living). Many would be removed from paying tax. I'm eyeing $30k for a family of four, I'll match that to some actual statistics and model it to find out what a good number is for both reducing poverty and maximizing revenue.

Actually, I'm not at all convinced that flat taxes will increase productivity. I can see that some people will be compelled to work longer (increasing the length of the workday and possibly reducing the number of workers) but it isn't clear to me that that will increase productivity (since a worker's productivity goes down as the day progresses and chances for making mistakes increase). Also working longer causes more stress and burnout - do we throw those workers out when they crash? I can't say much without seeing some data but I can't argue that a flat tax will increase productivity more than I can argue that it will decrease productivity. I certainly know why Bernier would passionately support a flat tax though.

We're just playing with numbers at this point, but I'm talking an increase of a few hours a week, mostly PT to FT. I also cover an example in my tax reform thread where I indicate how a spouse entering the workforce from being not employed (kids or whatever) wouldn't face the punishment from the loss of the spousal deduction. It both encourages mothers (or fathers) to enter the workforce at the flat-rate instead of paying the $1000 charge for deciding to work and then whatever taxes on top of that. A new income earner as part of a family could earn up to $20k under my system and pay less effectively than the current system. After that, they'd pay a few hundred more through until the next tax bracket (@37k). I'm playing with a 20%ish flat tax, which may be lower when you see what else I apply to it.

I think you could be sold on it. Not only that, but it'd put thousands into the pockets of the topic of this thread, low income earning Canadians, through them simply no longer paying ANY tax, whatsoever!

[myata]

The 2005 LICO for a family of 4 living in a city of over 500K is $32,556, for rural - $21,296.

http://www.statcan.ca/english/research/75F...2MIE2006004.pdf

Do you think that's enough for a family of 4?

It's way more than enough for a family of 4. Just do a math. I believe the average income per Canadian is in mid 30 K now, so the next thing we'll hear from NDP is that average family with one income earner must be poor.

Just saddens me that they come up with such an obvious BS (1 in 6 Canadians poor, all children poor and so on), it instantly undermines credibility for the legitimate causes in social develoment.

[Keepitsimple]

Layton's figure of 1 in 6 came from the Toronto Star's recent series on Poverty. Knowing that this ratio was dubious, I sent a "letter to the Editor". Of course, they chose not to publish it. Here it is:

The Toronto Star is to be commended for their attention to the issue of poverty – but its constant misrepresentation of data is not helpful. Exaggerations only serve to turn people off. Yes, we have an issue and we will always have an issue with people who are less fortunate than others - but let's deal with the facts so we can collectively provide the needy with a hand-up and for those who truly cannot fend for themselves - a hand-out. As an example, the Star claims that 1 of every 6 people live in Poverty. Their source, although not attributed, is the usual selective use of Stats Canada data. In fact, if we use the Stats Can LICO Before Tax income, 1 in 6 is a valid conclusion – but if one uses After Tax Income, the number is actually 1 in 9. I think we could all agree that for an honest measurement of purchasing power, After Tax is a better choice that Before Tax.

The Star’s analysis includes all workers who claimed income – including those under 18 and over 65. I'm not sure what age we should start at, but surely, workers that are age 16 – 21 should be excluded. They are just starting out in the workplace and it will take some time for their earning power to gain traction. The vast majority of these workers are not "poor". They are, like most of us at one time, simply starting out in life and paying their dues. Seniors (over 65) are also a "special" category. Their requirements are different - and quite reduced. My own mother is beneath the LICO, yet she does very well for herself.

So what is the right number - 1 in 10? 1 in 15? I don't think it matters much - what matters is that we recognize that there are real people behind the numbers – people with different situations and different needs.

[Saturn]

The 2005 LICO for a family of 4 living in a city of over 500K is $32,556, for rural - $21,296.

http://www.statcan.ca/english/research/75F...2MIE2006004.pdf

Do you think that's enough for a family of 4?

It's way more than enough for a family of 4. Just do a math.

I think I could pull it off for a family of 2 but 4 is a bit too much. What's your math?

[madmax]

Most of my comments on the $10 wage are in the Provincial Forum where the NDP have campaigned on the issue.

Since this thread isn't about a tax structure, and since no Province has tried to go it on their own but has relied on a minimum wage format, then I will leave my thoughts to the systems current status quo.

If we are going to have minimum wages, then these wages are to provide a living wage for working people. This isn't based upon market forces. Therefore it is based upon legislation.

The question in this forum is flawed and misleading. Not surprising for this website. I don't believe their is more "regulation" just more money for business to pay low income earners.

I don't believe a "minimum" wage is the be all and end all. But I don't see legislaton offering up anything different. Just a bunch of talk here.

So, should it go up.

Damn Straight.

[blueblood]

Won't this have an effect on inflation?

[marcinmoka]

Won't this have an effect on inflation?

Yep. Farms, small and large business' all will raise their prices to pay for these increases.

[Borg]

Won't this have an effect on inflation?

Yep. Farms, small and large business' all will raise their prices to pay for these increases.

Small and large business perhpas - farms - not likely. They are commodity based and therefore price takers not price setters.

Admitedly there may be a few exceptions - but the vast majority of farms will simply have to suck it up or reduce hiring.

Trust me there is no slack at present.

Borg

[ClearWest]

The question in this forum is flawed and misleading. Not surprising for this website. I don't believe their is more "regulation" just more money for business to pay low income earners.

Minimum wage isn't regulation?

It is regulation when they say "you can pay your employees no less than ___ dollars per hour".

Wikipedia defines regulation as being "a legal restriction promulgated by government administrative agencies through rulemaking supported by a threat of sanction or a fine."

Funny enough, it then goes on to list examples of regulation, and 'wage' is the third one mentioned. "Common examples of regulation include attempts to control market entries, prices, wages..."

(Regulation - Wikipedia entry)

"just more money for business to pay low income earners", you say.

If you're running a business, and can afford to pay your employees more than ten dollars an hour - that's great, go for it. But to tell someone else how much they must pay? With all due respect, that's a control-freak who does that. Jack Layton, control freak.

I can decide how much I will pay for labour, thank you very much. Just as I can decide how much I am willing to pay for a loaf of bread or for a pair of jeans or a set of drapes. There should never be a minimum price enforced by a third party. It should always be set/negotiated by the parties involved in the trade.

[Canuck E Stan]

If you're running a business, and can afford to pay your employees more than ten dollars an hour - that's great, go for it. But to tell someone else how much they must pay? With all due respect, that's a control-freak who does that. Jack Layton, control freak.

I can decide how much I will pay for labour, thank you very much. Just as I can decide how much I am willing to pay for a loaf of bread or for a pair of jeans or a set of drapes. There should never be a minimum price enforced by a third party. It should always be set/negotiated by the parties involved in the trade.

If Happy Jack could, he would give everybody $20 an hour, but what he forgets is business will only tack this onto the goods and services it sells.

Then it becomes a vicious cycle where higher prices would force even higher wages.

If a business doesn't pay enough or offers better incentives , people won't work for them, they'll go(or should go) work elsewhere.

[madmax]

Minimum wage isn't regulation?

The Question in the poll to which I responded was "more" regulation.

Not whether or not it was regulation. We already have a minimum wage. It had been around for many many many decades, it is legislated and regulated. The world has not ended. Canada has not been ruined by it.

Do I think it is the only alternative? Read the 10 dollar minimum wage thread in the Provincial Thread.

[madmax]

If Happy Jack could, he would give everybody $20 an hour,

Why?

[madmax]

Won't this have an effect on inflation?

Yep. Farms, small and large business' all will raise their prices to pay for these increases.

What farms are covered by the Federal Government?

[Riverwind]

If Happy Jack could, he would give everybody $20 an hour,

Why?

Because people like Jack Layton think business profits are evil and that any business that makes profit is not paying enough to its workers.

[myata]

I think I could pull it off for a family of 2 but 4 is a bit too much. What's your math?

On 30 K? You must be kidding, right? Or maybe consider yourself poor if you don't have 50" TV on a monthly rent? And an SUV? It's this kind of outrageours claims that drops credibility of their authoring groups down to the ground level, instantly. Even if they may have some worthy programs somewhere on their agenda, which is really sad (and counter productive if the aim is to actually get some real help to some who really need it, and not fan out hot air).

BTW, I'm speaking from personal experience, and knowing several people who make half of that many years on. It's plain and obvious nonsense.