Tuesday, May 23, 2017
Last updated: 2 years ago

Re: Prasad’s minimum wage letter

File photo Cherihan Hassun / The Ubyssey

File photo Cherihan Hassun / The Ubyssey

Having received your letter regarding the increase in minimum wage in B.C. I took issue with some of your points.

Firstly I would like to clarify that The Ubyssey did not state that an increase was a bad idea, it only questioned whether an increase of this magnitude — the proposed $4.75 — is too drastic. With this in mind, your reference to a poverty reduction plan is intriguing. Yes, an increase in minimum wage can be a part of such a plan, but only if applied correctly alongside other measures. However, that does not necessarily mean that an increase of nearly 50 per cent is wise. Increasing wages moves our economy further from the equilibrium point of perfect efficiency than we already are, causing an even greater deadweight loss to society. We must operate slightly above that point because companies cannot be relied upon to be fair with wages. Yet an increase of this magnitude is risky and could lead to a costly strain on the economy.

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While your point that workers on minimum wage will have an increased standard of living is correct, you have ignored those who are not on that wage. People already earning at or just above the proposed new wage will suffer a drop in living standards as their living costs will go up but their wages do not. This is due to the inflation caused by the wage increase.

However, these are not the people that will suffer the most; your letter failed to address the people who are unemployed, people without work actively looking for jobs. According to John Rawls’ famous Maxi Min ethical rule the way to increase the net welfare of society is to prioritize those who are worst off. In this situation the unemployed are in worse poverty than those struggling on the current minimum wage, and increasing that wage puts them in an even worse scenario.

Imagine an unemployed single parent who is having trouble finding work, their skill set and time are limited, then add to these inhibitors that companies have to pay a higher minimum wage to employ them. Their chances of employment are severely diminished. And it gets worse, the increased living costs caused by the augmented minimum wage make it even more difficult for the parent to support themselves and their child.

Yes the increase may help those just below the poverty line, but only at the expense of those who are even worse off.

Now, as you said we here at The Ubyssey do understand the struggle some students go through to pay for their education. All of us at the paper are students as well and we are all working to either fund or partially fund our degrees. Yet the same logic that is applied above is also relevant to students. Sure, those of us on minimum wage would love to get an extra $4.75 an hour, but again what about those students who also really need jobs but cannot find them? It is going to be even more difficult for them with employers more reluctant to hire at the new higher rate.

Now to another of your points; companies are going to be affected by such a drastic increase. There is no way around this fact. What is a little unclear is exactly how this will affect workers. Maybe companies will not lay off workers as you say, but they will certainly struggle to hire new ones. There is also the possibility that people on minimum wage will then be given fewer hours to account for the extra costs to companies. The costs of having to pay so much more per hour for every minimum wage employee will be felt somewhere.

One final thing to consider is the loss of industry to other provinces. With our minimum wage raised to $15 an hour, work that would have been done in B.C. may be done elsewhere, where labour is cheaper. This would be damaging to our economy as it would decrease investment, which would potentially reduce our economic growth.

Thank you for bringing up the subject as it is important for us as students to consider how it may affect us. There is plenty more debate to be had on this topic and I am hardly an expert. It should be noted that I do not believe we are currently in an ideal situation, but I do believe we should be cautious before supporting anything too radical as it could have the opposite of the desired effect.

  • charlesmenzies

    This is one of the strangest arguments against increasing the minimum wage. So, if I understand: raising the minimum wage is not good because there are people worse off than those on minimum wage. Is that the argument? Wild. With that approach nothing is likely to improve anywhere; I mean what’s the point?