LETTER – Don’t constant increases to minimum wage just add to inflation?
Help me Mel. Am I the only one that can’t make sense of the minimum wage issue? I know the idea is to get people closer to “living wage” but by raising the minimum wages, (Note: this does not include OAS) it forces the employers to raise their costs to allow for that increase, and then exponentially everything goes up and, once again, minimum wage is not enough.
Wouldn’t it make more sense if somehow, somewhere, someone has the balls to LOWER the cost of housing, groceries etc. What am I missing?
BEVANN HEW
Editor’s Note: I agree with you. When last year’s minimum wage increase came into effect, I wrote an editorial very much in like with your thinking. In part, it said, “In theory, the decision on the wage this year is based on logic — keeping up with inflation. In normal times, it makes sense, but these aren’t normal times…. As we know, inflation has gone out of whack; the minimum wage hike will be unusually high. Not the highest ever, but high enough to fuel inflation instead of respond to it…. One of the main causes of inflation is an increase in costs to businesses. One of the main causes of increased costs to businesses is rising labour rates…. All this newest minimum wage increase will do is give a new boost to inflation.”
ArmchairMayor.ca 
If labour is viewed as a commodity like widgets that people want, too many widgets the price of widgets will fall, while few widgets the price will rise. Same thing is true for labour, many workers drive labour wages down while few workers drive wages up. This is only true if we have perfect competition in the market.
Since we don’t have perfect competition, most employees will do what their bosses advise in order to keep their jobs but this is only true if there is scarcity of jobs. Employers have a natural edge in bargaining with employees because they have a big number of employees and will not go out of business if one of them leaves. If there is an over supply of labour, they just replace the one that left.
On the other hand, if there is shortage of labour the employer will have to pay more to keep his employees. What happens to wages in Canada for nurses if many nurses from Canada emigrate to Australia or what happens to wages of unskilled workers if we allow unskilled workers into Canada? Nurse’s wages in Canada will go up while wages for unskilled workers will go down.
Who determines the market for widgets. Producer of widgets does this by cutting or increasing production but he can only do that in a perfect market where the producer has control over externalities (land, labour and capital) the inputs into his business. Minimum wages are used to iron out the imperfections in the market for labour.
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Minimum wage and all other mechanisms left-leaning government introduce or invent circumnavigate the real issue. The real issue is people need to understand the power of an apprenticeship or the power of a university degree or a diploma which serve a real purpose. Every sector of our economy is crying out for competent people. All it takes a bit of a “drive” and a tad of ambition to get away from the dull drums of low wages.
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Critics contend that left-leaning government ideas are based on faulty principles and ignore human nature. Pierre, are you saying that humans, particularly low-income workers, by nature are “lazy”, “without ambition”, “without drive” and need to get off their “ass” and make something out of themselves?
Service industry is notorious for paying low wages. Mostly women work in the service industry and without these hard-working service workers most law offices, doctors’ offices, restaurants, banks, government offices, would close their doors. Labour laws, human rights, and unions championed by left-leaning government ideas recognize the need that the pie baked by the low-income workers needs to be shared more equitably.
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What I am saying is we cannot ( at least I can’t) trust “socialist” anymore than we can trust the CEOs with the well being of society.
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Castanet reports that:
“The median pay package for CEOs rose to $16.3 million, up 12.6%, according to data analyzed for The Associated Press by Equilar. Meanwhile, wages and benefits netted by private-sector workers rose 4.1% through 2023. At half the companies in AP’s annual pay survey, it would take the worker at the middle of the company’s pay scale almost 200 years to make what their CEO did.”
Damn those socialist for driving up inflation. Why don’t they eat cake?
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Food costs rose 25% from 2018 to 2024. This inflation was not due to wage increases: it was due in part to rising fuel costs but mostly due to increased shareholder profits. The system is broken.
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When viewed in macroeconomically, yes there could be a negative impact on small business. However, anyone making minimum wage isn’t hoarding any of this huge wage increase. Every nickel is plowed back into the economy. Minimum increases help alleviate poverty. Minimum wage isn’t a living wage. In B.C. a living wage is $26.00/hour.
The real culprit is wealth distribution in Canada. According to Oxfam,
“Four of the five wealthiest Canadians have seen their wealth increase by two-thirds since 2020. Additionally, the richest 0.02% of Canadians now possess more wealth than the bottom 80%. No matter how you do the math, the answer is always the same: the rich keep getting richer, and the rest of us, poorer. But make no mistake: inequality is no accident.”
It’s time we seriously consider providing a living wage. It’s immoral that a country so rich as Canada can’t provide the bare essentials to everyone.
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Stand by, Bevann. If you haven’t received your municipal tax bill yet, the bottom line will make you take a gasp of air if you are a senior on fixed income.
Soon to come will be the referendum from “Build Kamloops”; a plan guaranteed to put us all in further debt for this generation and into the next.
One group of homeless people are seniors who have been swallowed up by inflation. People who have worked all their lives, worked to have their own home and have no private pension no longer have the ways and means to carry on except for a season with a reverse mortgage.
The “attachments” you say would help in this matter might be the ones to which the Armchair Mayor alluded in a previous editorial. Neutering the Mayor has become an ongoing game.
Maybe we’ll hear from the DM of the month with her thoughts on neutering the Mayor and how successful that has been.
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Increases in minimum wage and other wage increases including to government workers of all sorts, do indeed add considerable upward pressure to inflationary trends. Left leaning governments which typically have the tendency to allow for wage increases hoping to reduce the living burden to low wage workers end up making things way worse for all.
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