Increasing the Minimum Wage in Alberta: A Flawed Anti-Poverty Policy
— Published on September 27, 2018
- As part of its effort to reduce poverty, Premier Rachel Notley’s government will raise Alberta’s minimum wage from $10.20 per hour, the rate when the Notley government took office three years ago, to $15 in October 2018. But, raising the minimum wage is not an effective way to alleviate poverty primarily because the policy fails to provide help targeted to families living in poverty.
- In 2015, the latest year of available data, 92.0% of workers earning minimum wage in Alberta did not live in a low-income family. Though counterintuitive, it makes sense once we explore their age and family situation. In fact, most of those earning minimum wage are not the primary or sole in-come-earner in their family.
- In 2017, 50.1% of all minimum wage earners in Alberta were between the ages of 15 and 24, and the vast majority of them (85.1%) lived with a parent or other relative. Moreover, 23.2% of all minimum wage earners in Alberta had an employed spouse. Of these, 90.1% had spouses that were either self-employed or earning more than the minimum wage. Just 2.1% of workers earning minimum wage in Alberta were single parents with young children.
- In addition to ineffectively targeting the working poor, raising the minimum wage produces several unintended economic consequences to the detriment of young and inexperienced workers. This includes fewer job opportunities, decreases in hours available for work, reductions in non-wage benefits, a shift towards automation, and higher consumer prices, which disproportionately hurt the working poor.
- A work-based subsidy is a more effective policy since it better targets the benefits to those in need without these negative economic consequences.