Canada’s minimum wage largely unchanged since 1975

Even if you’re not a fan of fast food, it’s been near-impossible to ignore the steady roar of protest coming from American workers at McDonald’s, Burger King, Wendy’s and KFC demanding to be paid what they say is a living wage - about double the federal wage baseline of $7.25.

In Seattle, meanwhile, the wage debate has collapsed into an ugly legal war between business owners and the city they operate in after local politicians unanimously agreed in June to hike the minimum wage up to $15 hour, the highest in the country.

San Francisco threatens to be the next big battleground after officials there announced that a $15-an-hour minimum wage will be on the November ballot. Likewise in Los Angeles where lawmakers are considering raising the pay of thousands of hotel workers to at least $15.37 an hour, according to the LA Times.

It seems only fitting Canadians, too, get caught up in some the excitement.
Statistics Canada did its part to kick start the debate on this side of the border with the release this week of a report detailing the historical ups and downs of the minimum wage over the past 30 years.

In its key finding, the statistical agency found just a one-cent difference between the average minimum wage in 2013 and the amount paid in 1975. In dollar terms the report determined the country’s lowest wage earners brought in about $10.14 per hour in 2013. The 1975 minimum wage (when adjusted for inflation) was almost identical at $10.13.

Of all its dips and peaks over the years, the report found the biggest change in real minimum wage has taken place over the last decade. Since 2003, there’s been an increase of almost two dollars, from $8.27 in 2003 to $10.14 in 2013. All provinces saw increases in the real minimum wage over that period.

For Armine Yalnizyan, senior economist with the Canadian Centre for Policy Alternatives, the government’s numbers are depressingly in line with her own calculations, and suggest ‘we are only now getting back to where we were in the mid-70s.’ The CCPA believes the average minimum wage for workers today should be more in the range of $14 an hour. The theory follows that if you pay workers more, they have greater purchasing power and are better able to help support the economy.

Whether or not we all agree with that is a question worthy of a national debate, Yalnizyan said. But, while we’re at it, she suggests we also ask ourselves where the money reaped over the past 30 years by the very companies that pay minimum wage has gone.
According to Yalnizyan, the economy has grown significantly since 1975, leading to profits for many big-name retailers and businesses.

So why is it none of this gets translated to the workers, she asked: ‘That’s the big question.’
At the Fraser Institute in Vancouver, British Columbia, senior economist Charles Lammam cautioned Canadians not to interpret the Stats Can findings as a call to arms to raise the minimum wage across provinces. He cited several studies that suggest that raising the minimum wage does little to alleviate financial hardship among low-wage earners.

Rather, it often has the opposite effect in that it typically prompts employers to reduce the number of jobs and working hours available, and scale back on job training and promotions. ‘Minimum-wage legislation has real consequences and the people who are most negatively impacted are those with the lowest skills,’ Lammam said.
The Fraser Institute favours policy that supports low-income earners through a guaranteed tax credit.

The Stats Can report also measured the minimum wage as a ratio of the average hourly earnings. Using that method, it found the average minimum wage rose faster between 2005 and 2013 than the average hourly wage (calculated at $22.27 in 2013).

Other highlights include:
- In 2013, the proportion of all paid employees earning the minimum wage was 6.7 per cent, up from five per cent in 1997. Most of the increase took place between 2003 and 2010.
- In 2013, 50 per cent of employees aged 15 to 19 years old were paid minimum wage. Among those who had less than a high school degree, one in five employees was paid at minimum wage in 2013.
- Together, retail and accommodation and food industries accounted for more than 60 per cent of all employees earning the minimum wage in 2013.
- The proportion of employees paid at minimum wage varied by province in 2013, led by Prince Edward Island (9.3 per cent) and Ontario (8.9 per cent). Alberta had the lowest rate at 1.8 per cent.
- The minimum wage rate hovered around $10 in all provinces in 2013. Ontario was the most recent province to hike its minimum wage rate, moving from $10.25 to $11 an hour in June and matching Nunavut as the highest rate in the country.