Alberta Politics Thread v2

[iggy_oi]

Originally Posted by Zarley

This is wrong. Minimum wage growth between 1965 (the year in which it was implemented) and 2014, expressed as an annual compound rate, was 4.85%. Inflation was 4.14% over the same period, also expressed as an annual compound rate.

By all means if you don’t believe that the minimum wage in 2014 would have been higher if it would have been increased annually with the rate of inflation since its inception go ahead and do the actual calculations for each year.

Economically, a minimum wage should be set at the market wage for an entry level, unskilled job. As a policy, a minimum wage is designed to protect vulnerable employees from exploitation. It's not an effective means of raising living standards for working people because of the significant number of distortionary impacts on the economy produced by setting a minimum wage policy above the market minimum wage.

If it protects workers from exploitation do you not consider that to effectively raise the living standards for working people? At what point do consider the wage an employer pays to be no longer exploiting an employee?

I think you may have had trouble understanding the example. I was only illustrating that, in this specific case, the minimum wage increase has produced the opposite of its intended effect: an absolute decrease in aggregate earnings at this firm.

Yes I misinterpreted your post as speaking in general terms as opposed to only in relation to your specific example.

I agree to some extent however I think you’ll agree that a guaranteed income vs relying on tips would be considered as a strong incentive. Similar to how in some more labour intensive industries managers may earn less overall than their employees who work a lot of overtime but would make more per hour that they actually work.

If it is flat or there is a minor decrease in the short term but the remaining employees have seen their earnings increase, as long as the economy can continue to grow as a result of the subsequent boost in consumer spending by not only minimum wage earners but also the employees who received an increase in pay to remain above minimum wage minimum wage earners should come out ahead in the long run.

Thanks for clarifying your position. As for the options available for dealing with the increases, I’d be interested to know whether you think the food service industry would be better able to handle paying their staff higher wages if they changed their business model from one that has their staff rely on tips to one where the prices on the menu are higher but tipping isn’t expected.

Not sure where you're getting this from. Firms pay employees a wage based on a number of factors: the skill level of their employees, the number of people in the market holding that skill, and the demand for that particular skill.

Do you believe greed ever plays a factor?

[Harry Lime]

My real world experience dealing with the minimum wage increases, from what is essentially middle management in a retail and service based business...

Every penny of cuts is being put on the lower level employees or relayed to higher prices to the consumer. The highest level of management and ownership hasn't felt this at all yet. When they do, things are going to get ugly.

The thing that bothers me the most is the 'we need to tighten our belts' talk. I have enough control and insight into finances to see where the increase is being absorbed.

[OMG!WTF!]

Originally Posted by Harry Lime

Every penny of cuts is being put on the lower level employees or relayed to higher prices to the consumer. The highest level of management and ownership hasn't felt this at all yet. When they do, things are going to get ugly.

The thing that bothers me the most is the 'we need to tighten our belts' talk. I have enough control and insight into finances to see where the increase is being absorbed.

I think the next level that will be hit is the mid level worker. The people that have years of experience but are not management will be paid the same as a new hire on their first day.



https://www.seattletimes.com/explore...orkers-is-not/

Wages for the country’s lowest-paid workers have increased 0.7 percent per year since 2007, while those in the middle — the 50th percentile — have gained 0.3 percent annually, according to an analysis of Bureau of Labor Statistics data by the Economic Policy Institute

American numbers but I suspect ours will be the same eventually. The highest level employees won't feel any pain here.

[puckedoff]

The manager needed a raise because it takes more managing in hard times to make sure the employees don't raise up and seize the means of production.

[belsarius]

I've actually enjoyed the back and forth debate on minimum wage, and it has moved me away from being an advocate for it, to mostly being neutral on the issue. I think both sides are right and wrong in their evaluations.

In the near term there is definitely job loss at the minimum wage level which counteracts a lot of the gains in the wage increase, Zarley is right that in effect there is no new money to go around, and cuts are made to maintain costs.

However in the more medium term I think Iggy has a point that those who lost their job will be able to find work and as noted by others a minimum level of service is required and additional hiring will be required. This will generate more economic growth as the low end earners tend to spend the most locally. This will drive up demand and force more labour at the higher wage.

In the longer term however the increased costs will simply be placed on the consumers and end up increasing inflation. This will reduce the purchasing power of the higher minimum wage and rebalancing the market at the new minimum wage. Costs will rise, prices will rise and everything will balance and the high end earners will feel almost no difference and the new minimum wage will still be below the livable wage.

Trying to use minimum wage alone in a market economy to lift people out of poverty is ineffective and inefficient. It addresses the problem bluntly, and ends up creating more problems; and in the end doesn't make a difference.

I think this kind of minimum wage increase needed something else to offset the damaging effects, to small businesses especially. I would have loved to see some sort of tax credit issued for businesses which maintained their employment levels to ensure they could afford the higher wages. That credit would easily have been compensated by the individuals paying more and the generated activity. Without it, like Zarley demonstrated, you aren't increasing pay, just moving it to a smaller number of employees.

[Harry Lime]

I have seen a positive impact on the minimum wage employees on a day to day basis, those who maintained their hours (because the business would cease to function if any more were cut, from what was left from last year's cuts).

Some of the people coming at this issue from a theoretical standpoint forget (or never knew) what it's like to need an extra 40 dollars a week to keep themselves away from the food bank.

[Frank MetaMusil]

Originally Posted by belsarius

Trying to use minimum wage alone in a market economy to lift people out of poverty is ineffective and inefficient. It addresses the problem bluntly, and ends up creating more problems; and in the end doesn't make a difference.

I think this kind of minimum wage increase needed something else to offset the damaging effects, to small businesses especially. I would have loved to see some sort of tax credit issued for businesses which maintained their employment levels to ensure they could afford the higher wages. That credit would easily have been compensated by the individuals paying more and the generated activity. Without it, like Zarley demonstrated, you aren't increasing pay, just moving it to a smaller number of employees.

I'm glad to see some of this is finally sinking in. Further back in the thread I suggested that Alberta tier their minimum wage increases based on the size of the business (like Seattle did) to reduce the impact on small businesses.

Obviously that's not what they're doing, and these are the results.

[belsarius]

Originally Posted by Harry Lime

I have seen a positive impact on the minimum wage employees on a day to day basis, those who maintained their hours (because the business would cease to function if any more were cut, from what was left from last year's cuts).

Some of the people coming at this issue from a theoretical standpoint forget (or never knew) what it's like to need an extra 40 dollars a week to keep themselves away from the food bank.

Having been on the food bank end before I totally get it. But I also would hate to think the only thing keeping me out of the food bank was that the guy next to me is now in the welfare line.

I think a more specific, and balanced increase would have worked better for everyone. Realizing how businesses would be affected and trying to find solutions while allowing the higher income didn't seem to take place, and while there were many workers who have benefited, there are those that have been negatively hurt, and instead of having just enough to get by, they now need to use that food bank.

Originally Posted by Frank MetaMusil

I'm glad to see some of this is finally sinking in. Further back in the thread I suggested that Alberta tier their minimum wage increases based on the size of the business (like Seattle did) to reduce the impact on small businesses.

Obviously that's not what they're doing, and these are the results.

I agreed with the sentiments for increasing the minimum wage but I find the implementation has been heavy handed. The Alberta min wage has kept up with inflation, but that doesn't mean that it has kept up with the income levels of the average Albertan.

$15 an hour, to me, was just a nice round popular number. There was no thought or research put into it. I think the Alberta min wage was too low when compared to the median income of the province, but instead of creating a manageable target (as compared to other provinces) this flat number was introduced. I don't know the exact numbers but going from 38% of median to 45% of median in 4 years is going to have a disruptive effect on the market.

The Seattle comparative would have been much better, I also think that an age based minimum wage could have been appropriate to ensure youth still had entry into the market while allowing for more experienced people (even if low skilled) to be able to find work. Really the end point being, raising the minimum wage to me was a good thing. The implementation of it was not. I never knew that Seattle had used the size of business in their process, so it is hard to compare jurisdictions where one thought out the repercussions, and one only looked at the possible benefits.

[FacePaint]

Economics Prof Trevor Tombe seems to think minimum wage has not been a major factor in any job loss:

On MinWage and jobs: best not to jump to conclusions. No strong evidence of job losses yet.

Research suggests young workers more at risk of job loss. But in Alberta the drop for aged 15-24 is similar to SK. So, more likely low oil at fault than MinWage. #ableg

[Enoch Root]

When the evidence doesn't fit your worldview, it's always best 'not to jump to conclusions'.

'No strong evidence of job losses yet'... other than, you know, job losses.

[FacePaint]

Originally Posted by Enoch Root

When the evidence doesn't fit your worldview, it's always best 'not to jump to conclusions'.

'No strong evidence of job losses yet'... other than, you know, job losses.

You think that this economics professor has a vested interest in a higher minimum wage? Look at the articles he's written and tweets he's posted then make an informed decision. Seems to me that your mind is clearly made up but perhaps others will use rational evidence based judgments...

[Dion]

Originally Posted by iggy_oi

Do you believe greed ever plays a factor?

You raise an interesting point. How do we determine what is greed and more importantly what is a fair profit for small business owners to make.

[Flash Walken]

Originally Posted by FacePaint

Economics Prof Trevor Tombe seems to think minimum wage has not been a major factor in any job loss:

On MinWage and jobs: best not to jump to conclusions. No strong evidence of job losses yet.

Research suggests young workers more at risk of job loss. But in Alberta the drop for aged 15-24 is similar to SK. So, more likely low oil at fault than MinWage. #ableg

Originally Posted by Enoch Root

When the evidence doesn't fit your worldview, it's always best 'not to jump to conclusions'.

'No strong evidence of job losses yet'... other than, you know, job losses.

FAKE NEWS!!

LAME STREAM ECONOMICS DEPARTMENT!

Everyone knows the U of C economics department has a liberal bias! Jack Mintz is a communist!

[PepsiFree]

Originally Posted by Enoch Root

When the evidence doesn't fit your worldview, it's always best 'not to jump to conclusions'.

'No strong evidence of job losses yet'... other than, you know, job losses.

...due to minimum wage, is the context of that comment

[Frank MetaMusil]

Originally Posted by Dion

You raise an interesting point. How do we determine what is greed and more importantly what is a fair profit for small business owners to make.

Insisting that small business owners pay their workers more is problematic because it artificially puts constraints on a part of the system governed by free interactions.

Think of it this way. Can they just demand their suppliers cut costs to make up for the higher wages? Those suppliers are under the same mandate to increase wages as well. Can they just raise prices? Not all the way if they want to stay in business.

If these employers were really all greedy they would have done so already. The only other place the money can come from is the employers themselves, or from lower labor costs by cutting employees.

For some it's much easier to attack the mythical "greedy employer" rather than deal with actual damage being done.

[chemgear]

Originally Posted by FacePaint

Economics Prof Trevor Tombe seems to think minimum wage has not been a major factor in any job loss:

On MinWage and jobs: best not to jump to conclusions. No strong evidence of job losses yet.

Research suggests young workers more at risk of job loss. But in Alberta the drop for aged 15-24 is similar to SK. So, more likely low oil at fault than MinWage. #ableg

Oil bottomed out in early 2016. It's basically been on a steady climb since - double what it was then. EDM prices are comparable in the increase. WCS has more than doubled.

That employment trend hasn't tracked oil well at all. Certainly worse than the correlation versus wage increases.



EDIT: Fixed some wording.

[TheIronMaiden]

Some contextual information.

Here is the 2014 small buisness profile in alberta. As far as I know it is the most recent version of this report.

http://www.albertacanada.com/files/a...BusProfile.pdf

Some highlights include.

Small businesses continue to represent the overwhelming majority of businesses
in the province

Without question, Alberta continues to be one of the best places in Canada to
establish a small business and find success.

Small businesses remain a sizeable and important portion of the provincial
economy, contributing 25 percent of Alberta’s GDP.

Now this is 4 years dated document, all the same, it is good to know if we are to discuss small businesses.

FWIW this article suggests that since a drop in 2016 small businesses in AB are doing well as of December 2017.

https://edmontonjournal.com/business...-canada-report

[TheIronMaiden]

Sorry if this has article already been posted.


https://www.cbc.ca/news/canada/calga...iles-1.4740923

A driver for a furnace-cleaning business. An aide at a fertility clinic. A greeter at a laser-tag arena.

These are some current job openings in Alberta that are offering minimum wage: $13.60 per hour.

The successful applicants would join the roughly 133,000 other Albertans being paid the lowest legal rate for hourly work. Together, they represent about seven per cent of employees in this province.

But it wasn't always like this.

Not long ago, minimum-wage work was much more of a rarity. Just 34,000 people — or roughly 1.8 per cent of Alberta employees — earned the legal minimum of $9.75 an hour in 2013.

There's a stereotype that minimum-wage jobs are typically for teenagers and students in their early 20s who are still living with their parents. But, according to data compiled by Statistics Canada for CBC News, this accounted for only about 31 per cent of people earning minimum wage in Alberta last year.

[Zarley]

Originally Posted by iggy_oi

By all means if you don’t believe that the minimum wage in 2014 would have been higher if it would have been increased annually with the rate of inflation since its inception go ahead and do the actual calculations for each year.

I guess I'll have to show my work then, unfortunately CP does not support spreadsheet functionality.

Year / Inflation Rate / Inflated Dollar / Minimum Wage
1965 / 2.40% / $1.00 / $1.00
1966 / 4.20% / $1.04 / $1.00
1967 / 3.40% / $1.08 / $1.15
1968 / 3.90% / $1.12 / $1.25
1969 / 4.80% / $1.17 / $1.25
1970 / 3.00% / $1.21 / $1.55
1971 / 3.00% / $1.24 / $1.55
1972 / 4.80% / $1.30 / $1.55
1973 / 7.80% / $1.41 / $1.90
1974 / 11.00% / $1.56 / $2.00
1975 / 10.70% / $1.73 / $2.50
1976 / 7.20% / $1.85 / $2.75
1977 / 8.00% / $2.00 / $3.00
1978 / 8.90% / $2.18 / $3.00
1979 / 9.30% / $2.38 / $3.00
1980 / 10.00% / $2.62 / $3.50
1981 / 12.50% / $2.95 / $3.80
1982 / 10.90% / $3.27 / $3.80
1983 / 5.80% / $3.46 / $3.80
1984 / 4.30% / $3.61 / $3.80
1985 / 4.00% / $3.75 / $3.80
1986 / 4.10% / $3.90 / $3.80
1987 / 4.40% / $4.08 / $3.80
1988 / 3.90% / $4.23 / $4.50
1989 / 5.10% / $4.45 / $4.50
1990 / 4.80% / $4.66 / $4.50
1991 / 5.60% / $4.93 / $4.50
1992 / 1.40% / $4.99 / $5.00
1993 / 1.90% / $5.09 / $5.00
1994 / 0.10% / $5.09 / $5.00
1995 / 2.20% / $5.21 / $5.00
1996 / 1.50% / $5.28 / $5.00
1997 / 1.70% / $5.37 / $5.00
1998 / 1.00% / $5.43 / $5.40
1999 / 1.80% / $5.53 / $5.90
2000 / 2.70% / $5.67 / $5.90
2001 / 2.50% / $5.82 / $5.90
2002 / 2.20% / $5.94 / $5.90
2003 / 2.80% / $6.11 / $5.90
2004 / 1.80% / $6.22 / $5.90
2005 / 2.20% / $6.36 / $7.00
2006 / 2.00% / $6.49 / $7.00
2007 / 2.20% / $6.63 / $8.00
2008 / 2.30% / $6.78 / $8.40
2009 / 0.30% / $6.80 / $8.80
2010 / 1.80% / $6.92 / $8.80
2011 / 2.90% / $7.12 / $9.40
2012 / 1.50% / $7.23 / $9.75
2013 / 0.90% / $7.30 / $9.95

PVinflation = $(1.00)
FVinflation = $7.30
N = 48
I/Yinflation = 4.23%

PVminwage = $(1.00)
FVminwage = $9.95
N = 48
I/Yminwage = 4.90%

The minimum wage in 2014 would have been lower if it would have been increased annually with the rate of inflation since its inception. This is an objective fact. In fact, there were only 14 years where the minimum wage did not outpace inflation.

Originally Posted by iggy_oi

If it protects workers from exploitation do you not consider that to effectively raise the living standards for working people?

Yes of course. What I'm saying is that once you raise minimum wage above the market minimum wage(defined as the intersection of supply and demand for an entry level unskilled job), you start seeing market distortions that act to limit the effectiveness of the wage increase as a means of improving living standards.

Originally Posted by iggy_oi

At what point do consider the wage an employer pays to be no longer exploiting an employee?

At the market minimum wage level.

Originally Posted by iggy_oi

Do you believe greed ever plays a factor?

Yes, greed plays a factor in certain cases. There are a certain percentage of greedy employees and a certain percentage of greedy employees. Keep in mind that firms are not inherently bad nor good, they're simply a reflection of their managers and directors. In my experience, the majority of successful firms act with the best interests of their employees taken into account.

[Dion]

Why don’t greedy companies pay their employees higher salaries?

Oped piece for information puroposes

Today we are going to discuss the issue of “why don’t greedy companies pay their employees higher salaries?” I have been hearing this a lot lately, both in my personal interactions and in the media. So, bear with me why I try to explain this issue in the simplest terms possible. I am struck that surprisingly few people understand the basics of how businesses work, so I will be trying to do a little educatin’.

I have started several small businesses. I have also worked in a corporation where I had to hire and fire people. So, I have first-hand knowledge of how small businesses work and how large corporations work.

So, why does McDonald’s pay such a low wage? People can’t live on $7.25/hour, right?

Well, the first point is that many people at McDonald’s are in high school or college or are just starting out their careers. So, relatively few of them are actually “living on” $7.25/hour. Many of them probably still live at home or in dorms rooms. They are doing what all employees are doing. They are renting their time (which is valuable but less valuable because they have relatively few skills) for money, which is also valuable.

But let’s say that there is an employee at McDonald’s who is trying to maintain a family on his own. How is it “fair” that he or she is making so little money?

The first point to understand is that most McDonald’s are franchises. This means they are actually not owned by the huge corporation McDonald’s but instead are owned by small business people. What they do is they pay McDonalds a franchise fee and either buy an existing McDonalds or build a new one. The McDonalds corporation charges a monthly fee to these franchise owners.

Starting a McDonald’s franchise is expensive. A good rule of thumb is that you probably want to have at least $100k cash to start the business, and perhaps a lot more if you are building a new McDonalds. And there is no guarantee you will be successful. As anybody who has driven around town knows, there are all kinds of fast-food competitors. As anybody who has started a business knows, you could spend money opening the restaurant and not be successful and lose all of your money.

So, the franchise owners expect a return on their investment. They didn’t invest $100k so they could spend the rest of their lives making $20k/year. They invested the money (and took the risk) so they could make a good living.

Could these franchise owners pay their employees more?

Sometimes yes, but again you need to consider the fact that many of them took out loans to come up with the $100k franchise fee. If they don’t pay their loans, they will lose their business. In addition, franchise owners have their own families and their own bills to pay.

So, let’s say a kind-hearted franchise owner pays his employees $15/hour because he believes nobody can live on $7.25/hour. There are probably some franchise owners who do this, but most of them don’t. He may think it is a wise business decision: perhaps you get better, more productive employees who don’t steal as much.

But let’s say all of the other fast food restaurants in town keep wages low. What happens when the economy goes south? What happens when people stop eating at McDonald’s and start eating at In N Out? The franchise owner must either 1)fire people 2)cut wages or 3)go out of business.

The reality is that small business people who stay in business are always worried about such eventualities. It simply does not make sense to pay people much more than what the market will bear. You are taking a risk that you may lose your business and all of the money and time that you have invested.

https://www.millennialstar.org/why-d...gher-salaries/