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The Two-Sided Truth to Manitoba’s Minimum Wage

January 11, 2015 9:30 AM | Columns

By Kate Jackman-Atkinson, myWestman

Canadian Money

(Canadian currency image via Shutterstock)

Every year since 2001, the minimum wage rate in Manitoba has gone up. In 13 years, it has increased from $6.25 an hour to $10.70 an hour, an increase of 71 per cent. According to Statistics Canada, the profile of minimum wage workers hasn’t changed much between 1997 and 2013. It continues to include predominantly young workers, less-educated workers and workers in the service sectors.

After the most recent increase, Manitoba has the fourth highest minimum wage rate in Canada, behind both Ontario and Nunavut, at $11 an hour, and the Yukon, at $10.72 an hour. The other prairie provinces, Saskatchewan and Alberta, have minimum wage rates of $10.20 an hour and even B.C., with its high housing costs, has a minimum wage of $10.25 an hour.

The provincial government has framed the minimum wage rate increases as a way of helping the province’s working poor by putting more money in their pockets. The problem is that in Manitoba, minimum wage increases also put more money into the government’s pockets.

While the minimum wage rate in Manitoba has increased, the basic personal exemption hasn’t. Manitoba has the fourth lowest personal exemption in Canada; meaning that in 2014, Manitobans could earn just $9,134 before they begin paying provincial income tax. In contrast, a worker can earn $11,138 before they begin paying federal income tax, $15,378 before paying income tax in Saskatchewan and $17,787 before paying income tax in Alberta.

Looking at it a different way, a minimum wage earner working full time (40 hours a week, 52 weeks a year) earns 83 per cent of their annual income tax free in Alberta, 72 per cent tax free in Saskatchewan and just 41 per cent tax free in Manitoba. A minimum wage earner in Manitoba can’t even work half time (20 hours a week) without paying taxes. It sure doesn’t seem like the province is serious about keeping money in the pockets of minimum wage earners.

Many businesses have opposed minimum wage hikes and it isn’t because they don’t support their employees or want to take advantage of them. These wage hikes have a real cost to employers and there comes a point when it isn’t financially viable to hire another person or stay open extended hours. A few years ago, a local small business owner told me that by the time they added up all the payroll costs, it cost them $20,000 a year to hire a high school kid to work part time after school. Such a situation helps no one, not the economy, not the customer who would like increased convenience and service, not the business that would like to hire another person and certainly not the worker who would like a job, experience and income.

In the end, many businesses are left with no choice but to increase their prices, making life less affordable for all low income Manitobans, not just those earning minimum wage.

The goal of improving the lives of the working poor and their families is very important, but it’s time for a different strategy. After 13 years of minimum wage rate increases, the reality is that there hasn’t been a significant decrease in poverty. The Social Planning Council of Winnipeg has noted that at best, poverty rates in Manitoba have remained constant. It has also noted that child poverty rates in particular are above the national average and have continued to rise and that food bank use in Manitoba is climbing. For some categories of clients, food bank use has doubled in the last 10 years.

After more than a decade, it’s pretty obvious that minimum wage rate hikes aren’t helping those who need it. Whether it’s by increasing the basic personal exemption, implementing a training wage to help get new workers in the door, or increasing welfare allowances, it’s time to look at other ways of helping the working poor. Manitoba’s businesses can no longer shoulder the burden alone.

Tags: Manitoba