For Immediate Release (Winnipeg): The Manitoba government introduced legislation yesterday to allow Cabinet to increase the minimum wage if inflation rises above 5 per cent, as measured in the first three months of the year.
Our office spoke against the Manitoba Minimum Wage Indexation Act when it was introduced in 2017. The base rate the minimum wage is increased against was arbitrary and is not based on the cost of living. This Legislation has kept the minimum wage low to the point that Manitoba will soon have the lowest minimum wage in Canada. Inflationary increases have not been successful in reducing poverty amongst working Manitobans, and minimum wage workers are being forced to work extra hours and choose between necessities.
Our office does the Manitoba Living Wage calculation on a regular basis. The last update in 2020 found the living wage was $16.15/ hour. An update for 2022 is forthcoming. The CCPA MB living wage is calculated as the hourly wage at which a household can meet its basic needs once government transfers have been added to the family’s income such as the Canada Child Benefit (CCB), and deductions have been subtracted (such as income taxes and Employment Insurance premiums).
When lower income workers earn more money, they have more spending power to meet their basic needs. Working poverty places stress on social services and adds to intergenerational poverty. Low-income workers were particularly hard-hit during COVID, losing the largest share of hours and jobs across the economy. The COVID recovery requires governments to redress inequalities present before the pandemic and exacerbated by the economic impacts of the pandemic. This starts with making the minimum wage a living wage.
In 2020, our office published “Surviving on Minimum Wage: The Lived Experiences of Manitoba Workers”. Researchers interviewed 40 minimum wage workers who reported how challenging it was to make ends meet on Manitoba’s minimum wage. Of the workers we spoke to, 38 per cent used food banks or sought out free community meals in order to survive. The cost of food in particular has risen sharply since 2020, above the overall average rate of inflation. The minimum wage must be based on the actual cost of living for workers. This revision to the legislation does nothing to remedy this.
Surviving on Minimum Wage includes a review of the economic literature on minimum wages and confirms the benefits of a sufficient minimum wage: “moderate increases in the minimum wage will benefit low-wage workers without negatively impacting jobs or the economy”. Low-income workers spend virtually all their money locally, which actually boosts the local economy.
The report’s review of literature and meta studies on minimum wages find that minimum wage increases have little to no effect on overall employment except a small reduction amongst young minimum wage workers. Positive earnings effects for minimum wage workers add to overall economic output.
Making the minimum wage a living wage is an important step to recognizing the contributions of the lowest income earners in our economy. The minimum wage should be matched with the living wage and regularly increased to meet the cost of living. This should be done as part of a comprehensive provincial poverty reduction plan that strengthens government transfers such as Rent Assist and measures to improve employment conditions, address precarious employment, require 10 days of paid sick leave, among other benefits.
The Canadian Centre for Policy Alternatives is an independent, charitable, non-partisan research institute.