Justin Trudeau, Truthiness, and a $15.00/Hour Federal Minimum Wage

So if you haven’t noticed there’s a Federal election campaign on now. I’m going to writing about it from time-to-time in the lead-up to the vote on October 19. I hope that all of my readers will get involved with local campaigns (try volunteering with the NDP, Liberals, or Green Party) and vote come election day (get registered here). In the interim I intend on writing about how labour market issues, particularly ones involving young people, are being treated by the major parties. One issue that’s getting some attention right out of the gates is the NDP’s proposal to raise the federal minimum wage to $15.00/hour and the criticism it’s garnering from Liberal leader, Justin Trudeau. That's the topic of this blog post.

To set this all up here's some background: in early July I got into a debate on Twitter with Gerald Butts, the Principal Advisor to Justin Trudeau, and Robert Falcon Ouellette, the Federal Liberal candidate in Winnipeg Centre, around the NDP’s Federal minimum wage proposal. It started when Mr. Ouellette tweeted out a graphic critiquing the NDP’s minimum wage proposal (check it out here). The graphic suggested that only a small-fraction of workers in Canada would benefit from setting the federal minimum wage at $15.00/hour. The graphic was rather misleading and a prolonged debate ensued around the merits of the Mr. Ouellette’s sophomoric critique of the NDP’s proposal.

A History Lesson

At this juncture, a history lesson is in order to give some important context to the discussion. The regulation of employment in Canada is typically a provincial responsibility due to the wording of the Constitution Act, 1867, which extended powers over the regulation of property and civil rights to the provinces. The Federal government did receive the ability to regulate employment in areas directly relating to its jurisdiction, such as shipping, telecommunications, railways, and banking. The Canada Labour Code regulates employment at Federally-regulated employers. Every province and territory sets its own minimum wage, which range between $10.20 (Alberta) to $12.50 (Northwest Territories). 

There is no Federal minimum wage in Canada at present. The Liberal government of Jean Chrétien eliminated it in 1996 and simply applied the various provincial minimum wages to Federally-regulated employers. I’m not going to get into the merits of that decision aside from saying that it was made in the context of a wider neoliberal re-regulation of Canada’s labour market towards “flexibility”, which saw negative changes made to unemployment insurance and social welfare programs, a push towards using low-waged migrant workers, a retrenchment of Federal involvement in active labour market programs, and a failure to update workplace laws respond to emerging labour market trends. Most of the foregoing has also been adopted as official policy by the Conservative government of Stephen Harper. This goes without saying, but the last twenty years hasn’t exactly been kind to working people in Canada and the origins of a lot of our current labour market problems (i.e. precarious work, stagnating wages, youth un(der)employment, deindustrialization of South-Western Ontario) can be directly traced back to policy decisions made during the Chrétien era.

What Did Trudeau Say and Was it Accurate?

I was a tad baffled about what Mr. Butts and Mr. Ouellette were saying on Twitter, but I’m baffled by a lot of things and simply moved on. That’s where things stood for a month until the Liberals’ campaign launch this past Sunday when Justin Trudeau took a swipe at the NDP’s minimum wage proposal. He stated: “the NDP will talk about raising the minimum wage. What they won’t tell you is that their plan won’t help 99% of the people who make the minimum wage in this country. It won’t help the people I met serving in restaurants, working behind motel reception desks, in parking lots and checkout counters. Tom Mulcair’s plan won’t give them a dime, because it only applies to minimum wage workers who are regulated by the federal government. NDP candidates won’t tell you that. They’re peddling false hope to hard-working people. They’ll say they will help. But they won’t. And Mr. Mulcair knows it.” Strong words, but is his statement accurate?

Well, Trudeau’s comments are a wee bit truthy. The fact of the matter is that the NDP’s proposal will increase the minimum wage across any number of industries and exert wider upward pressure on wages across the country. When the NDP originally rolled out the plan I had a number of reservations and frankly my knee-jerk response was deep skepticism, so I dug into the data and discovered some interesting things. The figures that Mr. Ouellette, Mr. Butts, and Mr. Trudeau seem to be relying on don’t provide an accurate picture. The graphic referenced above uses two figures: “577” and “418” (which is actually erroneous as 416 is the actual figure), which were the figures of the total number of federally-regulated employees earning at or below the minimum wage. These figures are derived from the 2004 and 2008 iterations of the Federal Jurisdiction Workplace Survey conducted by Human Resources and Skills Development Canada.

If you parse out the rest of the data in the 2008 Federal Jurisdiction Workplace Survey, which is the latest data we have, certain things become apparent. First, fully five percent (5%) of the federally-regulated employees were earning below $12.50 in 2008, just prior to the Financial Crisis and subsequent crash. Second, another thirty percent (30%) of federally-regulated employees were earning between $12.50 and $19.99. If you take an even distribution of wages between $12.50 and $19.99 you’re left with ten percent (10%) of federally-regulated employees earning between $12.50 and $15.00, if you combine that figure with the five percent (5%) earning below $12.50 you’re left with fully fifteen percent (15%) of federally-regulated workers earning below $15.00. In 2008 there were approximately 820,000 federally-regulated employees in Canada, so if the NDP’s $15.00/hour federal minimum wage proposal impacted fifteen percent (15%) then approximately 123,000 workers would directly benefit from these higher wages (it could be more or could be less, but this gives us a rough idea as to dimensions). 

Considering that wages have gone up a bit since 2008 and there is an argument that this data is stale, but it’s the best we have at the moment. In the Twitter debate I pointed out the stupidity of arguing over numbers given the utter lack of solid, recent data pertaining to low-waged, federally-regulated employees. Even if wages have gone up slightly there are any number of practices that are depressing wages such as employee misclassification, outsourcing work, the use of temporary workers, and union-busting. What’s clear to me is that Mr. Trudeau has launched an irrational attack on a meaningful anti-poverty measure using faulty logic and based a profound misreading of the underlying labour market data. Even if implementing a $15.00/hour federal minimum wage only helps 123,000 workers it doesn’t mean it’s a flawed, rather it’s a meaningful step in the right direction towards combating precarious employment. Across Canada, approximately 4,217,879 workers earn below $15.00/hour, so the NDP’s federal minimum wage proposal could potentially be helping close to three percent (3%) of Canada’s low-waged workers. 

The Pearson Airport Example

Let’s use the example from Toronto and how a $15.00/hour federal minimum wage could help workers in my neck of the woods. One of the biggest employment hubs in the Greater Toronto Area is Pearson Airport. Over 40,000 people work at Pearson Airport and the many of these workers are employed by federally-regulated employers. Countless security guards, baggage-handlers, screeners, fuel workers, and other service-sector workers are employed at Pearson Airport in precarious jobs. The trend at airports currently is towards rollbacks on compensation and outsourcing. Consider what’s happening to fuel workers who are facing a drop in wages from $24.00 to $14.00 due to contract flipping or new hires at Air Canada working in customer service who only start at $14.00; both sets of workers would immensely benefit from a $15.00/hour minimum wage. It seems odd that Mr. Trudeau is ignoring these workers when he attacks this measure and one wonders if he has any actual ideas of his own to combat the growth in precarious, low-waged work within the federally-regulated sectors of the economy.

Some Concluding Thoughts

I remain baffled by the Liberals’ stance, or lack thereof, on a $15.00/hour federal minimum wage. I've pressed Mr. Butts multiple times for a clear answer on what the Liberals' actual position is, but haven't yet received a response (perhaps he's not ready). Curiously, on September 18, 2014, Liberal MPs voted alongside the NDP and the Green Party in favour of a motion, that was ultimately defeated, requesting that the Conservative government reinstate a federal minimum wage and increase it to $15.00/hour. And now, less than a year later we have Justin Trudeau attacking the NDP for proposing the same measure, why the flip-flopping? This is a sensible measure that would exert upward pressure on wages across the country and keep Canada current with emerging compensation trends in the United States for low-waged workers (i.e. Los Angeles, Seattle, New York State) . Federally-regulated employers are typically very profitable and the low-waged workers working for these companies shouldn't be subjected to arbitrary minimum wage increases.

Going forward I will be keeping my eye on what the Liberals are proposing on the minimum wage file specifically and their labour market policies generally. At this juncture I'm literally dumbfounded by the critique that Mr. Trudeau and Mr. Butts have levelled at the NDP's $15.00/hour federal minimum wage proposal. It's hard to take either of them seriously on labour market policy when neither of them will come clean about what the Liberals' own position is on the issue. Given that the pressures precarious workers are facing this policy would seem to be a no-brainer; additionally, given that income inequality consistently polls high as an issue of concern amongst the electorate I really wonder why we're seeing an irrational stance on minimum wage from Mr. Trudeau. He has never experienced poverty and it might be high time for him to start listening to workers who have.