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McILVEEN: Hiking minimum wage to $15 would address poverty

Low incomes exact huge toll on society
Columnist Claire McIlveen (CHRISTIAN LAFORCE / Local Xpress)

The province’s low-wage earners haven’t had this much attention since the last time there was talk of a guaranteed annual income.

Did they notice?

Perhaps. Or maybe they were too busy working two jobs trying to keep their kids from going hungry to notice the debate – assuming they heard about it via cable TV, home Internet service, cellphones or any of the other media channels that the middle class (even an on-strike columnist) takes for granted.

Just as well, for last week, the very real, heart-wrenching predicament low earners face became the stuff of jousting by politicians and interest groups rather than a collective effort to reach consensus on an issue that should matter to all of us.

NDP Leader Gary Burrill began the discussion, pointing out high levels of poverty in the province and calling on the Liberal government to raise the minimum wage to $15 an hour from $10.70 in the next three years to help the working poor.

But Liberal Premier Stephen McNeil says a hike in the minimum wage would increase inflation and do low-income earners little good. Income tax relief, McNeil told reporters, is the best way to relieve poverty.

The Canadian Federation of Independent Business agrees.

On the other side of the debate are anti-poverty organizations and labour groups such as the Nova Scotia Federation of Labour, which says 130,000 Nova Scotians need a raise.

Although some of McNeil’s constituents are among the poorest in the province, they and other low-income Nova Scotians will have to wait until the province “gets back to fiscal health” for income tax relief, the premier said.

Since that state is often sought but seldom attained, low-wage earners in Nova Scotia are, yet again, out of luck.

According to figures from Alberta, where Rachel Notley’s NDP government is implementing a $15 minimum wage by 2018, 6.6 per cent of Nova Scotians earn the minimum wage – but many other poor Nova Scotians earn just above it.

In Alberta, 46 per cent of minimum-wage workers are between ages 20 and 44 – the prime child-rearing years – and 61 per cent of such earners are women.

Those statistics paint a dismal picture for children in these families.

According to a 2015 report on wages by the Canadian Centre for Policy Alternatives, 21 per cent of children in Nova Scotia in 2011 lived in households that didn’t always have enough healthy food. In 2012, writes Acadia University sociologist Lesley Frank, about 32 per cent of children in Cape Breton lived below the poverty line.

These are shocking figures we need to address.

The push for a higher minimum wage is not unique to Nova Scotia. The city of Seattle, Wash., is going ahead with the wage experiment.

Concerned that minimum-wage earners literally can’t live on the pittance they earn, Seattle’s city council decided in 2014 to raise the minimum wage over seven years to $15 an hour from $9.32, starting in April 2015.

Will it work? Will it bring people out of poverty and, with more money circulating in the city, spark the economy?

The University of Washington’s Evans School of Public Policy & Governance has harnessed about a dozen academics and economists to do a major study of Seattle’s implementation of a $15 hourly wage increase from 2015 to 2021, focusing on lower-income areas of the city.

A preliminary report about the first seven months of the wage increase, published in January, found food prices in Seattle went up slightly – but prices outside the wage-hike area went up even more.

The researchers concluded that grocery, retail prices and rents were largely unaffected by the wage hike.

Restaurant prices, however, showed an increase, up about 7.7 per cent in the city, compared with 3.5 per cent just outside the higher-wage area.

That makes sense. The restaurant sector employs many low-wage workers and higher wages could mean better pay for fewer workers.

Economist Mark J. Perry of the American Enterprise Institute writes that employment in Seattle dropped by almost eight per cent from April to the end of 2015, attributing higher unemployment to the wage hike. (He would like to see minimum wages abolished.)

However, information from Washington state’s monthly employment graphs show that employment in Seattle fell about half of one per cent during that period.

Statisticians would likely argue that, no matter which figure is accurate, it’s difficult to pin down a trend in inflation or unemployment in a six- or eight-month period.

We’ll have to wait to see the effects of the Seattle wage increase on quality of life, prices and the economy generally.

In the meantime, New York state and California are gradually implementing the $15 minimum wage.

In most constituencies, wages will increase more quickly for people who work for large, multinational corporations and more slowly for small, locally owned businesses with fewer employees.

Poverty exacts a huge toll on our society, both in terms of human misery, wasted opportunity and higher social and medical costs.

Health care, for example, accounts for some 45 per cent of the province’s spending and is the single-largest expense in the province.

Study after study have shown that poverty with its hangers-on of inadequate and unhealthy housing, poor nutrition and higher rates of stress and social and mental health problems – damages people’s health and social well-being.

Poverty is particularly damaging to children. One recent Manitoba study, for example, showed that increasing the prenatal income of low-income women by only $80 a month resulted in big health benefits in terms of birth weight and prematurity, both major factors for infants’ health.

According to a 2015 study in JAMA Pediatrics, researchers have found that severe poverty, stress and poor nutrition in childhood interrupt brain development.

A Canadian Medical Association paper on the social determinants of health says that “economic factors play a larger role in creating (or damaging) health than either biological factors or the health-care system.”

So, if you are poor, you will likely have more health problems and will die younger than your more affluent peers.

Many economists now reject so-called “trickle-down” economics, when governments reduce taxes for the wealthy and take a hands-off approach to helping the poor in hopes that the free market will help everyone.

That idea, Nobel Prize-winning economist Joseph Stiglitz said in 2015, “is absolutely wrong.”

“The income of the middle class has stagnated. The income at the bottom is even worse.”

By failing to address poverty, governments are ensuring that we spend more and more money on health care, social services and incarceration and perpetuate an underclass whose members will never have the spending power to boost the economy for the benefit of all.

But the worst thing is that we are consigning another generation of children to lives of poverty and deprivation.

That alone should be enough to spur government to act.

The NDP’s push for a $15 minimum wage in three years is perhaps too fast for Nova Scotia, but raising the minimum wage substantially would help thousands of families.

Burrill is right to push poverty onto the provincial agenda – an agenda that, at present, puts the balancing of the budget ahead of the real and pressing problem of poverty, particularly child poverty, in Nova Scotia.


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