Living wage or road to higher unemployment

CFIB urges politicians to think carefully before implementing wage policy

With municipal elections coming to a community near you in November, expect to hear some really silly policy proposals. Some will sound too good to be true.

Exhibit A: The “living wage” policy. Unions like the B.C. Teachers Federation, the B.C. Government & Service Employees Union and Canadian Union of Public Employees B.C. are already gearing up to push candidates to support what they have termed a “living wage.”

A “living wage” effectively becomes a new minimum wage that municipalities commit to pay their own staff. Anyone wishing to do business with the municipality must also commit to pay his or her staff a living wage. The unions backing the policy claim this will help solve B.C.’s poverty problem.

The minimum wage in this province is currently $10 an hour. The “living wage” is calculated at $18.81 an hour for Metro Vancouver.

You read that right – a minimum wage that is more than $8 an hour higher that the provincially set minimum wage is seen as credible policy in some quarters. For that matter, why not make it mandatory to pay $50 an hour or even $100 an hour? We could call that policy the “really good living wage” policy.

If raising living standards were as simple as just paying everyone more, we would have solved the poverty problem a long time ago. Heck, we could just mandate a really high minimum wage and we would all be rich.

The reason why provincial politicians think carefully before raising the minimum wage and would never dream of the dramatic increase proposed by the unions is they know that beyond a certain point increases in minimum wages cause unemployment.

Employers simply can’t pay people $18 an hour if they are only contributing $10 to the bottom line. The business simply wouldn’t survive.

It would never work in the private sector, but unions are pushing it in the public sector. A municipal “living wage” is promoted as if it helps everyone. The reality is that it helps some at the expense of many others.

If you are a municipal employee earning less than the living wage and now get paid more, you are arguably better off.

But what if you are the grandmother living on a fixed income whose property tax just went up to pay for the extra cost of those municipal wages?

What if you are the small-business owner who is now shut out from bidding on a local contract because you won’t stay in business if you pay your employees $18.81 and hour, as much as you might want to?

Fortunately, most municipal politicians in the province are too smart to fall for this misguided policy. This municipal election, let’s keep it that way.